Ethereum Q&A: The ICO Token Explosion

The ERC20 Token Standard, Token Summit, the explosion of token ICOs on the Ethereum blockchain, and whether this activity is premature in terms of security (and securities). Every million dollars you put into any token built with ERC20 creates a million-dollar honeypot test on the Ethereum virtual machine, implementations of Geth and Parity, the ERC20 codebase, and whatever poorly-tested code you added for your particular DAPP. The killer app for Ethereum is DAOs (decentralized autonomous organizations), reinventing the modern corporation -- just not that way, as venture capital firms... The security needs to be tested first with $10k, not $10 million; gradually escalating. The trade-off of flexible smart contracts is that every contract has to be independently tested. What happens to a brand-new start-up with a whitepaper but no management experience that suddenly comes across millions of dollars? Soon, not many dollars. ICOs right now are the biggest reputational risk for Ethereum. Opening up crowdfunding to a global audience is an amazing application, when you have governance, but when you do it prematurely you blow up the launch pad. Sometimes lessons have to be learned the hard way. The market will teach them when they lose their money. The purpose of this early stage experimentation should be to test the security of the protocols, not attempt to get-rick-quick. If we don't remind investors of the risks, they will get a visit from the SEC, because one of the first rules is that you don't promote securities to the unaccredited public.