Wikipedia Founder Doesn’t Trust ICOs
CryptoBit News Today2 min read
The founder of Wikipedia, Jimmy Wales, expressed his concerns over initial coin offerings (ICOs) on an episode of CNBC's Power Lunch.
When asked about the recent boom of ICOs, Wales said he didn't "entirely trust" the model and compared ICOs to a "Ponzi scheme." He sat down with CNBC to talk about ICOs amidst the rising popularity of the fundraising method and the SEC's decision in July warning people to invest with caution. ## Growing trend of ICOs
ICOs have gained traction as an alternative to venture capital or angel investing. Companies looking to raise funds in the blockchain space have turned to ICOs, where they can create and sell a certain amount of their own cryptocurrency to backers in exchange for an established cryptocurrency, like Bitcoin or Ethereum, or fiat money.
This hashtag began to trend after an announcement was made that Wales would be featured on the CNBC segment.
However, ICOs are still largely unregulated, resulting in warnings from the financial industry and regulatory agencies. ## Wales' concerns with ICOs
In the CNBC segment, Wales specifically pointed to companies that have raised money through ICOs and have yet to launch a product. He mentioned that these entities are "operating in a space that is very similar to a Ponzi scheme in a mature market."
"I think it's definitely not a good idea to invest in something if you don't really know what you are getting," Wales said. "When you're talking about 'a new coin' that is going to be listed on a random new exchange, you are pretty much guaranteeing that you are going to get ripped off."
In the age of "get rich quick" schemes, Wales said that these ICOs can attract attention from a lot of people.
Replying to a question from CNBC's Sara Eisen about his choice of cryptocurrency, he said, "I think that Bitcoin is the only one that has a lasting value." He added, "Bitcoin has a store of value and that's why it's the best." ## What it means for Bitcoin
The growing trend is likely to spark further comments from the Bitcoin community as well as other ICO backers. It remains to be seen whether Bitcoin will respond to the growing trend in ICOs or continue its own upward trajectory in the coming months.
