On Monday, the Commodity Futures Trading Commission issued a customer advisory about digital tokens, commonly referred to as cryptocurrencies or crypto-assets.
On July 16, 2018, the US Commodity Futures Trading Commission (CFTC) published a customer advisory[1] about the need to exercise caution and conduct research before purchasing virtual coins or tokens. "Understand what rights are attached to the coin or token being sold, and what underlying factors could affect its value," the agency wrote. "Be especially wary of promises or guarantees of future value." In its advisory, the CFTC alluded to the "network effect[2]," which many projects have claimed will result in an increase in the value (read: price) of their associated digital tokens.
Readers may remember that ETHNews recapped a CFTC podcast episode[3] from January, in which Andreessen Horowitz general partner Alex Rampell emphasized the opportunity to "bootstrap" the network effect through blockchain-based digital assets. Backed by Andreessen Horowitz, Filecoin[4] is one project that has sought to capitalize on the network effect. In August 2017, Protocol Labs raised approximately $186 million[5] worth of financing through its initial coin offering (ICO) for the distributed/peer-to-peer file storage system. However, nearly a year after its ICO, the project has yet to launch. That's not to say the idea is without merit. Imagine if Filecoin did to the cloud storage industry what Airbnb has done to the hotel industry. Reshaping the digital economy could be a gamechanger… if it works.
These are the sorts of promises that have invited rampant speculation in the blockchain/cryptocurrency industry. Who wouldn't want to have a small stake in the next Dropbox? What's been especially challenging for cryptocurrency enthusiasts is that these digital assets or tokens aren't always what they seem,
