One of the most common complaints I hear from people is that ICOs are a scam. The complainers are usually crypto-enthusiasts, and they say that ICOs look like scams because they do not have an actual product or service. (They are probably right.)
In this essay I will demonstrate why the ICO craze looks more like an early Internet bubble than a typical scam.
I will show you five reasons why you should invest in ICOs. Maybe after reading it, you’ll finally believe in ICOs. Or maybe if you’re one of those people who refuses to believe in anything unless it has a white paper and is completely transparent, you’ll just take me to task on something else.
Tl;dr:ICO craze looks more like early Internet bubble than typical scam.
There are two main reasons why ICOs are appealing to investors. One is that they’re new, so you can make some good money if you invest early and sell before the market collapses. The other is that they’re unproven, so it’s not too risky to put your money into them. But the most important reason is that ICOs are the new hats, and hats are something people like to wear.
Like hats, ICOs come in different shapes and sizes. Some look like a new way of fundraising for startups; others resemble a novel way of investing in securities; still others look like a way of making money without doing any work. They’re all created by smart people with good ideas and a flair for marketing.
If you buy into ICOs, you will be buying into an idea whose time has come. And if you buy into an idea whose time has come, it’s possible that the time has passed for you as well.
1. ICOs have personality.
2. ICOs have a vibrant community of developers, investors, and users.
3. ICOs are more like product launches than fundraising rounds.
4. ICOs can be viewed as a way to sell tokens that represent future services or products on the blockchain network.
5. ICOs are the future of fundraising.”
The ICO market is not just a bubble, it’s a new form of investment. We have seen this before with the popularity of tech IPOs in the past 10 years.
In the dotcom boom, companies that went public were valued many times the revenue they had ever generated, and could return their investors millions. It was a new way to invest in start-ups and it worked spectacularly well.
But then the bubble burst. Companies that never made it to that stage didn’t go up in value. They just went out of business. Or back into private hands where shareholders got less than they paid for them.
This same thing is happening now with ICOs: people are getting paid lots of money for what look like non-viable companies. If you want to get rich quick on the stock exchange, you bought some shares of an unprofitable company in an IPO or you put your money into rare coins or your name goes into a famous painting. But if you want to make money from something innovative and new, there’s no such thing anymore as a sure thing. You have to be willing to take big risk and use your time in a very different way.
The cryto-community is a lot like the game-community. It has some smart people, a lot of people who are reasonably well informed, but also a lot of people who either don’t know what they’re talking about or whose investing results have been disappointing.
Most of these ICOs are scams, but some are not. Some will be scams in which the scammer ends up selling his shares to his own investors at a huge profit. The ones that are not scams will still have problems, because there is no reason to believe they can deliver the promised products in any reasonable time frame. If you put money into an ICO expecting to make money in the long run, you may be disappointed.
[…] So in the spirit of full disclosure, I have to admit that I own some Lisk. I bought as soon as it was available on HitBTC and immediately sold on Binance after the price jumped.
I’ve got very little understanding of decentralized applications (dapps), but the idea of a new set of Internet protocols is something that excites me.
If you look at the ecosystem surrounding most dapps, there’s one thing that stands out: money. If a dapp had an ICO and raised millions or even billions of dollars, chances are it will be considered successful. This is an incentive for developers because it means they can sell their tokens for a profit, and for investors because it means the network has value.
There are three problems with this approach: 1) An ICO doesn’t guarantee success; 2) It devalues the tokens being sold; and 3) It encourages one-sided projects which often fail to deliver on their promises.
As with any form of investment, there’s a lot of hype around ICOs driven by marketing and public relations campaigns designed to make you think that they’re going to be successful. That hype itself can incentivize people to invest in them, but then those same people will be disappointed if they do not
Why is this taking place? What’s going on in the markets?
It’s a classic case of market psychology – and it’s not just the cryptocurrency market, but all markets.
1. People are feeling increasingly insecure about their jobs and personal finances. They feel they’re not getting ahead, their money isn’t safe, and they’re not getting ahead, so they look for alternate options.
2. They feel they’re doing all they can to save money every day, to buy things they need; but that doesn’t seem to be working out well enough.
3. They have less control over what happens in their lives than they think; all their life choices are made for them by someone else, so why should things work out?
4. People are feeling that the financial system is taking advantage of them; banks can offer them better rates for their debts than small businesses can, so why should they trust small businesses with their money? Why wouldn’t it be better to put all your eggs in one basket?
5. People are feeling very pessimistic about what the future holds – there aren’t any opportunities for people like them anymore, it seems; and if there were, perhaps those opportunities would be available only to those who could afford to take risks with