Sentimental Bubbles

TL;DR
TL;DR
Sep 5, 2018 · 5 min read

The current sentiment towards crypto in general and ICOs in particular is not favorable. Smarter people than me have called the end of a crypto bubble. I personally did not see it popping as it did, but as hindsight is 20/20, here’s my current understanding.

Bitcoin came to be in 2009 and it took more than 8 years for it to reach the near $20k peak price. In doing so, it had to overcome a lot of hurdles, such as being associated with illicit activities, Mt. Gox losing all their customers’ money, the Pope speaking against it being used for slavery and recently even rapists like Bill Cosby using it to protect their assets. The price is still facing a correction compared to its ATH but the tech is already changing the world and failing economies such as Venezuela see its people resorting to it as means of protecting themselves against government policies.

Ethereum came along in 2015 with the promise to decentralize everything and to enable the largest transfer of wealth in history, out of the hands of the rich few into the hands of the deserving many. It too was plagued by issues such as Bitcoin’s price falling after the ICO or The DAO hack but still managed to stand out as the platform on top of which decentralized applications can be built and ICOs can be launched.

Blockchain automagic

People that understood the transformational potential of blockchain technologies saw the opportunity of buying a piece of this fantastic future. Some sold it for profit to those a bit later in the game, who then did the same, and the snowball started rolling. More and more people became interested in the technology, and even more in the immediate investment returns by investing in blockchain startups.

People outside of the space read about the fantastic ROI for cryptos and how regular Joes like themselves invested pocket money and became millionaires, so they rushed in to do the same. Between December 2017 and January 2018, everything exploded and the more optimistic of us were happy that finally the long-awaited money has entered crypto. The more experienced investors saw a pattern similar to other bubbles, and cashed out.

We’re all rich!

Others, myself included, started working out by juggling bags that were increasingly heavy and with the hope that markets work in cycles so the next bull run is just around the corner. I am a strong believer in blockchain tech so I am one of those guys who held through the worst, but also cashed out some as I reflected at the current state of things. Will there be a next cycle in the market and all is going to be OK? Long term, definitely YES. But short term, NO is the better answer, as some things need to improve.

Mimicking the Initial Public Offerings, Initial Coin Offerings quickly became a great way for innovative teams to fund their world changing visions. A lot of great projects offering novel solutions to problems in finance, real estate, advertising, media, supply chains and many other domains have been funded this way. Some of them are run by competent teams with strong work ethics, clear vision and transparent reporting on their progress.

Inebriated by the sudden rush of cash, even decent ICO teams spend their investors’ money on parties and lavish purchases. Worse than that, sharks looking to collect naïve money put together a team and a whitepaper, collect the money and will likely just let the project fade into oblivion. The worst are scammers, who simply take the money and run, never to be heard of again.

The remaining good projects didn’t see too much ROIx because their ever-increasing appetite for capital got mainly funded through pooling. Whether it was done through the “traditional” pooling groups, or by Venture Capital firms reselling their allocation to the pooling groups, most retail investors got access to seed rounds and private presales, so the interest for new tokens listing on exchanges waned. ICO Rating’s Q2 2018 about ICOs is a sobering look at the space, and things are not improving.

Figures from ICO Ratings report Q2 2018

The TL;DR of it all is that over the last year people invested in crypto to get rich, sharks and scammers were drawn in by the easy money they got without even signing one official document and the weary investors stepped out. If you add that most transactions happen over unregulated exchanges where foul play is a given, there is no surprise the market is in its current state.

So, what can we do?

Well actually a number of things:

  • Reinforce your belief that cryptographically secured decentralized immutable trustless automation will change the world for the better.
  • Share that belief with your friends, family and co-workers, explain the benefits of the technology and all the cool use-cases you see for it, hold their hands while they join the space
  • Do your own research before investing — if you are not 100% confident about the people, technology, business opportunity, token metrics and sentiment around a project, skip it
  • For your bags: jump on the project’s Telegram, Twitter and Reddit, get engaged with the team and the community, suggest ideas, call to action
  • For everything: demand transparency so you avoid getting caught in misinformation wars, hold people accountable so you deny an easy escape route for those who don’t take your investment seriously
  • Wait for regulations to come — the Wild West was truly an epic time to get rich for the cutthroat few, but a terrible time for the average person. Look forward to Security Token Offerings and Initial Convertible Coin Offerings

My call to action for you is to review the bullet points above and start working those ideas into your behavior in the crypto space. There are great minds crafting our future out there and they need our help. Reinforce your belief in crypto, share it with others, do thorough research, ask for transparency and hold “them” accountable. Just like the internet, the blockchain is here to stay. We will laugh a few years from now at how the market was not even measured in trillions and some of us will even get to drive the proverbial Lamborghini on the moon. While I will not promise to eat my dick if things don’t turn out this way, I honestly believe that crypto is history. In the making.

TL;DR

Written by

TL;DR

I read ICO whitepapers and share my understanding. Internet strangers are rarely qualified and honest, so always do your own research.

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