Crypto Needs to Start Self-Regulating.
Tech is Dead. Marketing is the Money.
The end of 2017 marked a major turning point in crypto, with the total market value rocketing up to nearly 800 billion USD. This caught the attention of the entire world, and it seemed overnight Bitcoin grew to be a household name. CBOE futures trading began and banks and financial institutions started their foray into the space.
Investing in 2017
In 2017 investing in a crypto based on the tech and whitepaper was a solid strategy. Stellar Lumens had an outstanding year, starting in January 2017 at $.00234 and peaking in December at $.75. That’s a 319,500% increase. A $500 investment in January would have returned $160,256 in December.
Why did Stellar perform so well? XLM is attempting to solve real world problems, mainly with cross-border international payments. The team is extremely accomplished, the whitepaper touches on all of the important aspects, and they have a real working partnership with IBM. While the partnership was relatively recent, it shows that a major corporation like IBM saw the value in Stellar.
Airdrops, Forks, and Shills. Unhealthy for Crypto in the Long Term
With no regulation and major financial institutions entering the market the strategy changed. 2017 investment strategies don’t work as well. The market has morphed into quick churn pump and dumps utilizing airdrops, forks, and social media hype. Rhett, the dev who forked ZCL into BTCP is now forking Primecoin to produce “Bitcoin Prime”.
Yi, the head advisor for Odyssey, is tweeting about airdrops while the official channel denies it.
A shitcoin called Hexx is having a 1:1 BTC fork which literally brought it back from the dead.
While this is in essence free money for those understanding the pump value of forks, airdrops, and social media shilling it is absolutely destructive for the space and cannot and will not lead to good things in the future. What is extremely concerning is that nobody seems to give a shit. It is a pyramid scheme mentality, who cares as long as you enter in on the bottom.
The phrase “due diligence” is meaningless. Often times buying in early on whats shilled on Reddit and Twitter is a sound strategy as the hype greatly influences the price. Greater fool theory is far more applicable in the space. “Successful” projects in the cryptosphere today spend far more on marketing than on research, have disposable income for exchange listings, and have possible paid shills across social media.
Self-Regulating the Crypto Space. Step up ICO’s + Whitepapers.
I have a few suggestions for self-regulation. Whitepapers must be more comprehensive, and include information that any business proposal would include.
Introduce the problem the coin is trying to solve, and why the project is needed. Were prior attempts made to solve this problem, if so why did they fail.
Define any clear terms. Vague terminology “machine learning” “artificial intelligence” “data driven”. Most whitepapers purposely use this rhetoric, and make no attempt to clarify any of it.
What are obvious concerns/roadblocks facing the coin? How will these be overcome?
Explain the benefits of the coin, a clear roadmap, and most importantly competition. Competition is hardly ever mentioned; there are duplicates of nearly every coin and sometimes dozens of coins trying to “solve the same problem”.
References, references, references.
Platforms like Lympo and Auctus have no clear solution for addressing volatility. This is such a basic problem to address, as a platform will never operate successfully if its asset fluctuates 50% in a day.
I’ve spoken to many developers during the course of writing my articles, it is disheartening how many can’t answer very simple questions, and how they dance around questions like politicians.
What Exchanges can do.
Exchanges need to do a better job at auditing future listings. This is not difficult to implement on a basic level as coins are listed regularly with anonymous teams and no whitepapers.
Binance can remove Bytecoin. This is a very bad look.
What the U.S is doing/will do.
- Clamp down on fraudulent ICO’s and coins. If the space can’t regulate itself I have no doubt the SEC will step in with more force.
- Deny exchanges from listing questionable assets, possibly including privacy coins.
Summary:
You Can’t Flaunt the Tech to Woo Friends to Invest, Cause the Tech is Dead.
Marketing is the money, not the tech. Assets that are performing well in 2018 are doing so mostly due to marketing/shills. It wasn’t always this way, but it is what it is.