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I don’t think I could’ve picked a better time to give my not-expert estimation around ICOs and what I think to be an insanely over-valued set of companies. EOS regulated to raise more than USD 4 Billion during its yearly ICO, continuing the vogue of multi-million dollars ICOs, without a stable product or even a generally supported testnet.
The first question I ought to ask everyone is: how are we expecting these launches to be profitable?
If you feel like rating about how it’s normal and for me to look at innumerable other examples, like Tesla, Uber, Facebook and so on, let me give you my study on why I believe this trend can lead to a destructive path of pointless forwards and misused funds.
Note: This article shouldn’t be taken as fiscal advisement as it represents my personal opinion and views. I have savings allotted in cryptocurrency so take whatever I write with a grain of salt. Do not provide what you cannot afford to lose and always read as much as conceivable about a project before investing. Never forget: with distinguished power, comes great responsibility. Being your own bank lows you’re always responsible for your own money.
The discrepancy between technology and reward
I don’t think I know any market, especially surrounding technology, where the premium matches the technology utility. I can pick tons of examples outside the Internet fizz era, like Tesla, Uber, the entire 3d Printing industry or even AI.
The act is there little connection between price and technology due to speculation. But taking a chances affects everything, even traditional markets.
Remember that wonderful disruptive ice tea company? Me too!
What I rather want to focus on, is not the fact worth and technology do not walk hand-to-hand, but the rather epic amounts being poured into cryptocurrency reciprocal projects.
When you value many of the existing platforms you should ask yourself:
“Do I characterize as this project has the chance to achieve a positive ROI?”
From protocols to stands, this is what really matters. I don’t care how many of the world delinquents product X or Y is trying to solve or how many years of experience the team has.
The before all thing I ask myself is why a certain project needs X amount of money.
How is the capital being spent? What Am i buying and what are the risks? How much are the link up and founders risking?
Am I being fairly rewarded for the brutal risk of devoting?
When a company like Bitclave or Cardano raised millions of dollars, although I as for oneself invested in them, I always wondered if they could ever realize a profitable ROI. Because the market is so young, it doesn’t really matter, as people pleasure pour money into brilliant new concepts, usually caring little for a indifferent return on their investment in the long term.
Why?
Well, because myriad expect to sell those tokens immediately after the company is sloped in some big exchange. This is, a insanely high percentage of investors do not sorrow about product, team, roadmap, or even company values. If you don’t imagine me take a look at the many examples on Coinmarketcap. They show what befell immediately after projects hit exchanges.
Something like this.
What you large see is a pump and dump of those tokens. Meaning, investors were altogether speculating and taking advantage of being early. Is there something misuse with that? Of course not, except in the long-term my personal bet is that people choose get burned.
To explain why, we need to analyse the anatomy of ICOs.
The reason why I themselves invest in any given project is always linked to the medium and long-term expected advances. So I need to worry about how much money Company X is raising, what is their gist product and idea, who is leading the project and how good I think the team is, and how do they expect to spend the funds raised.
Don’t get me wrong, there are numberless criteria to choose from and this is my personal view. As time follows by it’s always about the survival of the fittest: are the tokens being used well? How are the company and team values represented? Are they following-up with their roadmap?
Varied importantly: how are the economic incentives for users being applied? Does the estimate really need a blockchain?
just kidding
The goal is to learn which projects wish actually benefit from blockchain and which won’t. To do that just hesitation if said project uses tokens as a means to distribute rewards amongst users and if the overall goal is to decentralize the market in some way.
The discrepancy between tokens utility and owner rewards
To me, the really key feature I always try to look at, is how tokens are used. There is no long in using blockchain technology if you simply wish to store data in a give out manner.
Any agent who interacts with your business must be rewarded with tokens or use nominals to make the initial interaction. At a high level there are two different coaches of thought regarding token’s utility:
- You either need tokens to use a offering (like appcoins, upfiring, etc) or,
- You get tokens for using a product (like bityond, medico, etc).
The key here is understanding the difference between governance and infrastructure. There are way too diverse projects focused in great platforms and awesome APIs, without a bona fide need for their intrinsic token (ahem, stablecoins I’m talking to you gazeboes). If you do not need to decentralize your business infrastructure, which I completely accept given the lack of scalability so far, then governance is definitely the only way to decorously create an incentives system.
If the platform you’re considering investing in doesn’t yearning to give you back tokens in any way, forget it.
There are exeptions like outlines (ethereum, IOTA, cardano, etc), although I tip my hat to NEO (previously Antshares) for creating an ecosystem where narcotic addicts get rewarded for keeping tokens, while being a protocol. It needs some upgrading in terms of decentralization, sure, but at least they’ve figured out a way to incentive minimal holders to keep tokens. That’s a huge win and more projects should perform the same approach.
Don’t do an ICO if you cannot offer anything new with your souvenirs, like decentralized governance or infrastructure; that’s the underlying message here.
Remunerative incentives means redistributing rewards for all agents, keep that in be offended by!
thanks to blockgeeks
The discrepancy between product development and marketing
This is my favourite apex as I consider it to be one of the major reasons why ICO projects tend to raise way more scratch than needed.
Yes, I’m saying it.
Product development and user interface are currently the bottleneck, not selling and PR.
The reason is quite obvious: if you don’t have a bloody working product, you don’t lack hype and awareness. What you need is to make sure whatever “next big emotional attachment” you’re building actually works.
Because funds are easier to find and due to the decentralized genre, these companies tend to treat them irresponsibly. Just ruminate on the many examples of crazy events and insane amounts spent on PR exploits while road-maps keep stretching as development cannot keep up with hype and drugs’ expectations.
thanks to WooBull
If your argument is saying how the important thingumajig is to grow your user-base, let me remind you that we’re talking about people’s condensed earned cash. Founders, CEOs and Managers of ICOs should grasp this. I don’t think it is ok to pay hundreds or thousands of dollars for weekly marketing offensives.
No, I really don’t think it’s OK to bluntly accept pricing for most ICO trackers and Counselling teams.
We all want to make money, I get it. However, we must understand decentralization also means white-label corporate bullshit is not the way to go. If you’re spending your personal money on these startups, be demanding.
It’s your cold hard cash bro. Be a badger
Make sure your money is not going to the wrong people, being regurgitate on crappy online marketing campaigns and mailing lists. Pressure ICOs to lay out more into product and business development, instead of draining crowdsale funds into bonny marketing events that generate high social media volume engagement.
Demand more transparency on funds allocation and business expenses. Don’t disregard any project that raised a couple million during an ICO should correlate with talk back to a be accountable to you. Not having contractual rights doesn’t mean companies can do whatever they scarceness. There are moral obligations and values to respect.
Decentralization means the total happens at a slower pace and that’s ok. We cannot have both an increased effectiveness and effectiveness.
It’s either one or the other.
What I can say is I used to be more positive around ICOs until I at the end of the day dug deep, met some founders and key advisors, looked-up rates asked by most ICO trackers for PR, scrutinizes or overall exposure and realized most are too accustomed to traditional businesses and don’t definitely get the aim of cryptocurrency: to decentralize.
My advice? Forget most YouTube reviewers, ICO trackers, virtuoso advisors and Telegram channels.
99% is crap.
Reviews are paid, ICO trackers assign insane amounts to list projects and give priority to the ones who pay numberless, independently of the underlying project or idea and advisers care more thither BTC and ETH pre-payments than doing some actual work.
Good values type giving honest reviews not based on payments (much like the Weiss exemplar) or being transparent about projects you have personally invested in, notably if you’re an influencer, are just two quick fixes that could potentially assist out.
The bubble will pop, but good projects will survive!
At this implication, this conclusion becomes obvious.
The hard question to ask yourself is which invents will remain, as to me that is not so obvious.
Many smart people say there’s prevailing to be a killer app that will tip the scale.
Except, I already know a hatchet man app doing exactly that: Bitcoin;
We still need better billfold apps that connect every blockchain, I know, however there are numberless already deployed. The problem now seems to be which one will live.
Peradventure adoption hasn’t taken place, not because people can’t spend the species, but because they cannot earn them. Yes, great UX/UI for wallet apps and pathway to spend tokens are important, nonetheless we’ve been going on and on in circles all that point. If you don’t have a way to distribute tokens to people as a reward, for participating in your network, there is no spur to use tokens.
Having a way to spend tokens is meaningless if I cannot earn them.
My go out of ones way to of view is for you to focus your attention, not only in protocols, but also in any outline which aims to distribute tokens to users as a reward for participating in the network.
Any way you can notion of of: as a miner, as a staker (hodler) or as a user. Projects like Steemit, Bitclave, Neo or Pre-eminence – which offer an actual incentive to use the network – are great examples because any deputy who interacts with the network gets richer for participating.
As you enrich the network, the network embellishes you.
This is, to me, the true meaning of decentralization: competition and cooperation come hand-to-hand. It’s not not about your own gains, but also the network gains and how you contribute to its change for the better and growth.
The cryptocurrency ecosystem will change how we deal with information, information or even time. Our attention will be the new oil as we now, too, have a way to monetize it.
Do not plug up investing in ICOs because some are scams or because they’re too perilous. It’s the only way to keep the system running. Be smarter about it and think of sense a business could potentially benefit from distributing rewards to its network of operators and put your money into ICOs doing exactly that.
Don’t waste your faith on the market and let it mature; some projects will at last rise to the top.
The only remaining question is: will you be riding them, or what?
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