Tone Vays Describes ‘Inevitable ICO Bubble’ at Blockchain Economic Event, Toronto

Well-known “Bitcoin Maximalist” and despiser of ICO’s (Initial Coin Offerings) Tone Vays has lately been so deluged with idiotic requests to advise on ICO’s that he has updated his LinkedIn profile to the following:

“I am NOT interested in your ICO/Token Sale. Please send all requests to Vitalik Buterin instead who is responsible for this nonsense! To know why your ICO / Token Sale is probably a scam, my Consulting Rate is 0.1 Bitcoin/hr. I will be more than happy to explain it to you.”

Vays, a former Wall Street risk-analyst and VP at JP Morgan, had a longstanding interest in stock trading and eventually left banking to trade independently. He got into Bitcoin, became a content creator and now generates mostly Bitcoin-related content and teaches trading part time.

Vays delivered a short version of his talk ‘The Inevitable ICO Bubble’ yesterday in Toronto at the Blockchain Economic Event, a conference teeming with ICO vendors and investors scouting them.

“Trading is hard,” Vays told Bitcoin showman Max Keiser in an interview Keiser conducted in the conference lobby.

Vays was working at Bear Stearns when it failed, and his talk described how, to him, the current ICO fever resembles the frenzy he witnessed on the frontlines of the of the dot-com run up in the late 90’s: a five-year speculative mania that Vays says sucked growth out of stock markets for the next fifteen.

“Many (pundits) at the time were not even close to getting the top right,” said Vays.

Vays gave salient examples of dot-com IPOs that shot up then crashed spectacularly, including, an “everyone becomes their own website” service, which, after an IPO that showed highest ever first-day gains, “…(was) gone in 3 years.”

Vays also discussed the stock product of a company called VA Linux, which hit public markets at almost $300 a share only to be shortly delisted at a few cents.

“Cashing in on these bubbles is great,” said Vays. “Very few can do it.”

And some did it spectacularly.

Mark Cuban, said Vays, conceived a system to broadcast amateur sport called Cuban made $300 million dollars on the IPO, then sold it to Yahoo, who valued each user at ten grand each and paid Cuban in stock. Cuban then turned around and sold his Yahoo stock at the top,  became a billionaire, and two years later, Yahoo delisted, said Vays.

Many people talk up ICOs by espousing the idea that they are a democratic investment opportunity, that “the little people need a chance.” Unfortunately, said Vays, “Nobody knows who the winner’s gonna be.”

“Nobody knew that Facebook was gonna win; I thought Myspace would win,” he said.

Vays warned that many companies today are just chucking a hot buzzword into their names to boost stock prices, a phenomenon Vays saw happen in the .com bubble. One company, said Vays, simply changed it’s name to “E-digital” and saw it’s stock shoot up from six cents to $24.

Because average people, “can’t invest in all and don’t know which one is gonna win,” said Vays, “that’s one of the reasons why I don’t like ICOs.”

Vays ended with a clip from the “The Wolf of Wall Street,” in which Leonardo D’icaprio plays a maniacally greedy version of felonious trader Jordan Belfort:

“We set the price,” says the character, “Then sold it back to our friends.”

The clip felt eerily nauseating at a conference full of deal-hunters.

I asked Vays whether his cautionary content is designed to create the need that his trading courses subsequently fill:

“Basically there was a huge demand that I could not fulfill for free…I just wanted to do free content and my specialty is trading. So I just started writing articles talking about trading and my outlook on Bitcoin. That led to demand that asked for my Youtube channel. And while I never anticipated on monetizing any of my work -I just wanted to do something for fun- what happened was I had so many people emailing me and so many people asking me questions that I was forced to put a pay wall to separate spam from those who were actually interested. And that led to demand where people wanted to see me in person.”

Vays did point out one ominous disimilarity between ICO and dot-com eras: In the dot-com period, when the first online trading platforms became available, retail investors using them had to prove they possessed at least twenty-five thousand dollars of disposable capital. Today, however, “All restrictions on trading that restrained the dot-com bubble are (now) removed.”

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