In the appendix to this article, I have included a spam email that promotes a "token", which has become the usual term for crypto- currencies for people who wish to avoid using the term "coin." It is also used by people who do not want their tokens to be considered as currency. So first it's worth dealing with a myth.

Myth: CryptoCoins are different to tokens

They are the same thing. They are non-physical records of assets, recorded on a chain (well, let's ignore black boxes for a moment) and can be bought, sold and transferred in exactly the same way. They have no intrinsic value. Their price depends entirely on market forces and that depends entirely upon confidence that that someone, somewhere, at some time, will want to buy that token and how much that person is willing to pay. There is no independent valuation of tokens. 

Myth: An ICO token's value depends on the performance of the company

That would be probably be illegal because it would mean that the token represents shares and an ICO is not the same as an IPO.

In fact, an ICO is a parallel fund-raising technique that specifically does not give the owners of a token shares, or shareholder's rights, in the company. The tokens, or coins, have a life entirely independent of that of the company. 

See https://financialcrimeriskandcompliance.com/elan/web/20180129_lets_have_an_ico - Let's have an ICO.

Myth: ICOs are not regulated

Yes, they are, in many but not all jurisdictions. They are regulated as virtual assets. But, some issuers are trying to be sneaky. Whereas many jurisdictions decided ICOs should be issued, albeit in a much lighter form, some of the current crop of issuers are looking to bypass that.

Bypassing Regulation

New coins are started all the time. Mostly, they do not come to the market in the sense of a formal issue. They kind of leak out through an exchange or two where an exchange can be persuaded to list it or, even, if this is part of the business model, sponsor it. 

In this way the exchanges not the tokens are regulated. 

Where issues are regulated, there must be some form of prospectus: it's not a big thing like floating a company but it must exist and it must tell the truth.

But if the token is already issued, then that can be, to all intents and purposes, bypassed.

The not Initial Coin Offering

It follows that the sneaky thing to do is for those creating the coin/token to make the initial issue themselves. That, reports say, is what the issuers of much hyped, but not successfully so, token Shibu Inu did.

Many tech companies have issued their own tokens, often called "native" something or other. Many of those have been issued, then traded. And many seem as interested in the price of their tokens as they are in the business they are supposed to be doing. And many go down as well as down. 

Myth: all company related tokens are basically a fraud

It is absolutely not true that the concept of a company-related token is ++inherently fraudulent. But equally it is absolutely not true that all are not fraudulent.

The rules for identifying fraudulent tokens are basically the same as for identifying fraudulent share offers, even though the tokens are not in fact shares.

First, no one can predict that value of tokens because they are not tied to anything except news and rumour. So any claim that a token will rise on market sentiment or a specific event is false. 

Secondly, buying tokens is not an investment in the usual sense of the word. It's gambling because it is not connected to the performance of the company.

Third, is the token price easy to manipulate?  Let's take as an example a token called choise.ai. I have no reason to suspect there is anything suspicious or otherwise open to question about this token. I chose it for the simple reason that its data helps illustrate a point. 

You can see the price is a fraction of a fraction of a fraction of 1USD. You can also see that there has been a steady drift even though roughly USD2m has been traded. USD2m is, roughly, 8500 tokens. OK, that big jump in the middle: that represented a volume of 1.8 million and a value of 0.004503 . 

Stay with me: that means that the price could be boosted for round about USD8000. 

I'm not suggesting that's what happened but what if... 

what if someone paid 4,000, watched the price spike as others saw it climb, then sold for 8000 with the result that the price fell back to 0.0043 and a bit, which is what the price did before starting a general decline back to where it started, more or less.

This graph shows that quite small amounts of USD can make tiny changes in price that, because the price is so tiny in the first place, can make large differences in the USD returned. 

This is not new and it's not a crypto problem: it's a problem with low value shares in small-cap companies on secondary markets and the opportunities for manipulation and fraud are legion. And the pump and dump schemes, promoted by some form of messaging system and/or media have been around since financial markets were first created.

So we should not buy new tokens?

I'm not saying that but I am saying that you need to understand what you are buying, and who you are buying from, before you do. And like all such offers, don't be taken in by talk of massive returns, however they are phrased. The simple truth is that tokens are, for the most part, very high risk and very uncertain as to their future market. After all, you can only sell what someone else is willing to buy, and usually at the price they choose. Regardless of what you hear, crypto is almost always a buyer's market: sellers can almost never say "I'll hold onto it and make more money" - and those that do might well be exactly the people you would not want to deal with. 

SAMPLE SPAM 

Instant 100% Gain at Listing: 
Your Entry to a High-Growth, Sustainable Future 

MENTIONED IN: 
Early investors always win. Will you be one of them? 
DOUBLE YOUR INVESTMENT TODAY! 

INVEST NOW
[link removed]
LAST CHANCE TO LOCK IN your GAINS! 

Instant 100% Gain at Listing:
When Luessen Token (LTE) launches on ZBX Exchange, your tokens will double in value immediately. Yes – you read that right: invest at our 50% pre-sale discount now, and on day one, your investment is already 100% higher. 


Why Act Now? 

Time is running out! The Luessen Token (LTE) pre-sale is nearing its end, and this is your last chance to invest at a massive 50% discount. Once we hit the exchange, the price immediately doubles — don’t be the one watching from the sidelines! 

50% Discount in Pre-Sale 

Get in now at half the listing price. The moment we go live on ZBX, the value instantly doubles. 

Real-World Utility 

Backed by cutting-edge nano technology, LTE is a project with real impact—not just speculation. 

Massive Growth Potential 

A 100% increase at listing is guaranteed, and with adoption growing fast, multiple 100% gains could follow. 

Follow us 

[/x.com/luessenTech]
[/www.luessen-group.net]

With our innovative and globally unique nano-technology, we are setting new standards in heating technology.