So What Exactly Is An ICO, Anyway?

Imagine this: You're a Silicon Valley startup with a great idea for a new cryptocurrency system. Perhaps you want to streamline the Parent/Babysitter payment system so that it can be digital and encrypted. What a great idea! Let's call it BabyCoin. The only problem is you need people to give you money so you can actually make the currency. Now, you could go to a bank or try getting venture capitalist investors, but what if you could raise money without having to give up any of your ownership of the company? Enter ICO.

Here's how it works, You create a document essentially detailing exactly how the system would work (usually called a white paper), make a pretty website and explain why it’s a great idea that could be very useful. Then, you ask for people to send you money (usually Bitcoin or Ether, but you can also take fiat) and in return you send them back some BabyCoin. They hope that BabyCoin will get used a lot and be in high circulation, which would raise the value of the currency.

It’s important to note that unlike an Initial Public Offering (IPO), investing in an ICO won't result in you having an ownership stake of the company you're giving money to. You're gambling that the currently worthless currency you pay for now will increase in worth later and make you money.

So Who Can Launch an ICO?

Literally anyone! Currently, there's very little regulation on ICOs in America, meaning as long as you can get the tech set up you're free to try and get your currency funded. Right now cryptocurrency as a whole is kind of like the wild west; there's gold in the hills and relatively little law to speak of. This can work in your favor or it can lead to getting swindled. Of all avenues of funding, an ICO is probably one of the easiest to set up as a scam. Since there's no regulation there's nothing stopping someone from doing all the work to make you believe they have a great idea, and then absconding with the money.

 

 

By Benjamin Sherry | Updated January 29, 2018

INVESTOPEDIA

 

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CASE STUDY

One of the Three Certain Things in Life: Taxes, Taxes, and More Taxes

Scenario 2

Shirley Gold works full-time as a hair stylist. She is paid a set salary plus a percentage of the hair care products she sells her customers. Shirley has many repeat customers who reward her with tips for a job well done. Most of her customers tip her in cash.

Because the cash tips cannot be traced by the federal government, Shirley reports only a small percentage of her tips on her 1040 tax form.

 

    Items for Consideration

1. Is it possible for the government to find out about Shirley’s tips?

2. How is rationalization involved in this case?

3. Why should Shirley keep accurate records of all the tips she receives?

4. How is opportunity cost* involved in this case?

 

* Opportunity costs are resources given up when a choice is made. For example, a person has $30 to spend. That money can be spent on dinner for two, a new shirt, or a savings account deposit. If the person chooses to buy a new shirt, opportunity cost would be the dinner for two and the savings account deposit.

Taxes throughout Russian history

The salt tax

To finance military needs, taxation was screwed up to the maximum. Salt was perhaps the most easily taxable item, since it was highly visible at its point of production and was traded everywhere. In 1646 Tsar Alexei imposed a uniform and high rate of salt tax to replace a variety of commercial duties. The new levy turned out to be a disaster. Not only did it provoke “salt riots” in Moscow in 1648, but also it disrupted the salt trade. Due to the sharp rise in price of salt, people refused to buy it, the treasury income fell. The Salt Riot was over in a matter of weeks. Common folk irked at a new salt tax that made the commodity dramatically more expensive, besieged Tsar Alexei I at the beginning of June, soon joined by opportunistic Streltsy who had not been paid in a while. The specific target of their rage was the boyar Boris Morozov, the elder brother-in-law of the teenage monarch, and the true power behind the throne. Meek and religious Alexis was extremely loved by people, and he earned the nickname "Quietest".

A few days of mayhem, a few boyars’ heads on pikes later, the Streltsy had been bought off and the rioters divided and quashed. Alexei avoided handing over Morozov to the vengeance of the uprising, and “exiled” him to a monastery. He would return from “exile” in a few months, once everyone had chilled out and the rising could be taken “with a grain of salt”.

A year later, it was necessary to calculate how many thousands had been lost on salt fish – used in Russia more than meat – that spoiled because it was not properly preserved, owing to the high price of the salt. Besides, much less salt was sold than before, and remained in the packinghouses; due to this fact, it turned into brine and dribbled away. The salt tax itself had actually been abolished at the end of 1647, but other direct taxes were tripled to compensate for the loss of revenue.