Why Civic CEO Vinny Lingham isn’t impressed with two-token blockchain projects

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Civic CEO Vinny Lingham has been known his level-headed analyses of cryptocurrencies and the blockchain industry in general. Last month at a conference, he became a voice of reason in a room raging with ICO founders. He said that “the crypto sector will need to begin self-regulating due to a number of incidents that have caused concern recently, otherwise governments will impose stricter regulations,” adding in his presentation that “industries that don’t self-regulate get regulated.”

In another ICO event, the man dubbed as the “Bitcoin oracle” criticized that most tokens in existence are in fact, securities. “If the price of something is determined by its ability to deliver an investment return then it’s a security,” Lingham said. “If you’re building a utility token, it has to have real utility — if you’re just using it to raise money, then it’s a security.”

When asked about blockchain projects that utilize a two-token system, Lingham is not impressed either.

“People will raise money by whatever way they possibly can—if it means bending the rules, changing the system, and unsuspecting people will wind up putting up the money to buy it. But just because you can raise money in a certain way doesn’t mean you should,” Lingham said.

Some blockchain projects offer two different tokens: one for utility, and one for governance. Segregating the two keeps the utility token liquid, and reserves governance tokens for those who want to get involved in the development of the project—and those who just want to HODL for profits later on. Unfortunately—although most founders of such projects say otherwise—governance tokens act quite like a stock and give holders similar powers as if they were stakeholders.

Lingham, who has been an open supporter of Bitcoin Cash (BCH) was also asked about the scaling issue on Bitcoin. He said that it’s impractical to pin hopes on the Lightning Network, which is an unproven solution.

“Lightning, maybe it works, maybe it doesn’t. The point is, you’re going from something that’s proven, that can scale, at least to some degree, versus something which is unproven and it may not be able to scale, and we’re pinning our hopes on it. It’s very impractical,” he said.