Launching ARCC in the Crypto Winter of 2019
In May 2017, the entire token launching craze was just getting heated, and there was almost no information on the web. A Google search on the subject came back with a handful of ‘how to launch’ initial coin offerings articles on Medium and assessment sites were just popping up. By the end of 2017, the token launch phase was in full swing and anyone with a whitepaper, LinkedIn profile and a number of cryptocurrency influencers as advisors jumped into the market. But now at the start of 2019, we are full swing into the crypto winter with the fall out just hitting the industry, from massive 50%-70% staff layoffs to the closure of exchanges and the miners going offline in droves. It will likely only get worse as many crypto funds have put on a brave face, but due to poor treasury management have taken on massive losses on paper. But for firms who have management that have been around this type of cycle before, the crypto winter is a good opportunity to focus on the product and getting a team together that can operate efficiently while appreciating the opportunity they have.
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So first off, this crypto winter isn’t a ‘bad thing.’ Contrary to all the doom and gloom that the community is saying, this is an expected phase of a new industry cycle. That being said, I won’t say it’s painful either. The first question is, how did we get here? We can play the blame game here and say that there were too many scammy projects and people just speculating in the market, but news flash, with every new industry with great potential and that is open to the financial markets, this always happens! From the internet, to mobile apps, going back to television, radio and even railroads, there has always been a speculative mad rush when something is really promising. Now, the doomsayers will compare crypto to the tulip mania total bust, but really crypto is in the same scope/area of what happened during the market advent of the internet back in 1995–2001.
The main thing to take away is that the reason all of these industries go through this exact crypto winter scenario is that the early projects that were funded through the speculation hype always get smashed about 2 or 3 years later, meaning that the results that were promised don’t happen. Eventually companies need to start making cash and when the majority fall short…
The one truly unique characteristic of the crypto market is that the industry timeline is on hyperdrive, every event in the industry seems to happen 3 times faster than what even happened during the internet boom. I’d attribute it to the fact that the crypto market is global and works off the current tech infrastructure we now have in both the internet, mobile access and social media. This has accelerated the speculative boom and bust, but may also lead us out of the crypto winter sooner. But going back to the results, the crypto winter will end when companies actually make good on the expectations they have set out. It’s that simple, but not.
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What is great about the speculative phase of the market is the same thing that makes it painful in the crypto winter. The great amount of investment that has been invested into technology and infrastructure development — which may not be commercially viable yet — will set the foundation for the industry later. Case in point, many new chains are actually going to launch this year as well, and they will have pressed the envelope in terms of both scope and scale. While the companies behind them may not survive this crypto winter, their innovations will live on. But for investors supporting these great visions, they will financially bear the brunt of their demise and a lot of early adopters who were looking for astronomical gains, will find this period especially depressing.
But, with absolute certainty I can say, once crypto firms start to meet expectations, then market participants still active (who have also changed their outlook to something more along the lines of 2 to 3 years out), will see their gains increase exponentially over the next 10 years. You just need to look again at the internet industry, while there are just a few companies that made it past the internet bubble burst, the ones that were formed or were able to grow during the internet winter came out as the biggest winners over all, i.e. Google, Facebook, and Amazon, etc. But having the same expectations that there will be some miracle bounce or that this stage of the industry is going to come back to what it was, is simply wishful thinking. Again, it now comes down to results that meet expectations and when that happens, mass adoption will follow suit.
I fully sympathize with all the current investors in the speculative bubble state, I mean, when everyone is ‘making money’ how do you not participate in the hype? But the main distinction is that, when everyone is making money in a speculative bubble, it’s not because they were brilliant or resourceful, but rather the entire market floated all the proverbial boats. But in the same way, when the tide ran out, who actually knew how to paddle, let alone have a boat that actually floats? But, there is no one to really blame here, on an industry macro level, things are playing out exactly as they always have.
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So why launch during the crypto winter for ARCC? Why didn’t we launch it sooner, and how can we really excel in this environment?
For a project like ARCC, it requires a lot of education and for nearly everyone we spoke to in the space, no one wanted to push it on their agenda because it would require too much education and people were making too much money with the opportunities they had in their hands. i.e. it was easier to push simpler but more technical projects that fit the speculative market expectations. The industry is young, so if there is a formula that works for a public sale, just do it. And ARCC didn’t fit that formula and the executives, myself, Stanley and Eric were not willing to bastardize the project so we could just ride the speculation wave.
Most people would think that that was a silly move, why not just take the money and pivot later. But for us, as +40 years old founders and executives, it’s time wasted. Our motivation was not to get crypto rich as all of us are already established in reputation as well as financially in our respective industries, rather, this was an opportunity to really apply our knowledge and experience for social impact. Also, we wanted to set out with the right expectations because we also knew, that at anytime, the bubble could burst and then we would be back where we started.
Launching in these market conditions is vastly different than launching in a speculative market. Even now, a lot of marketing and community firms are still approaching us to say, ‘look, you have to do it this way, you need more crypto influencers, you need more community members quickly, this is how you do it…” and I get it, that worked, but it was all smoke and mirrors. Are all these marketing firms and influencers going to contend with all the fallout from the projects they backed? No, they will go on and say, ‘hey the market tanked for everyone’, and that is fair, and it was the right approach at the time, but it was never going to work with ARCC. We would have needed to dumb down ARCC too much and then it wouldn’t be the same project or objective of what we as a team were looking to do, namely take a stab at making real socio-economic change.
As hard as it is to believe, the current crypto winter has been the best time for us to launch as it both: eliminated most of the noise, and also allowed for the entire crypto community to take stock, and reflect as to what really makes a good project. This has given us some breathing space to present the full project and take that time to educate the interested in the scope and objective. We wouldn’t have had that opportunity pre-crypto winter. Also, our project is an economic innovation, not a blockchain tech one. We are taking what works in the blockchain tech space and adapting right now for market/product adoption as our entire focus is the utility adoption of ARCC.
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Good projects will always be funded regardless of the market sentiment, because there will always be some money in the market by those who have also seen the cycles before. Of course some VCs/Investors have been around a long time, so they are able to play both the speculative market and the downturn trend with their own proven playbook, but at this point the criteria will be considerably different than in the speculative market.
What makes ARCC a solid project in this crypto winter are the following, and it’s not because we’re special or have some secret formula, it’s just that we are structured for the long term due to our scope.
- ARCC’s utility is not changed by the volatility in price.
In many cases, the utility of the token can be made inert, if the price were to get too high or too low, as the price would supersede the utility of the token rendering it too valuable or too worthless to use in a utility transaction. If the price were to get too high, holders would rather keep the token as a speculative investment rather than use it, or else, if the value were to drop too low, then participants wouldn’t have the incentive to bother to use the token to access the services. In ARCC’s case, the function of Social Proof of Work allows for participants to socially mine on the platform, so the rate at which one earns ARCC will be adjusted daily based on the current price and supply of ARCC. Whereas ARCC bought and held off the platform has no bearing on the utility as it cannot be used on the Social Proof of Work network, because only ARCC earned on the platform can be used in the platform, thus guaranteeing the functionality of ARCC in securing the integrity of the Social Proof of Work network (in this case ensuring that we have constant data inputs and verification of the socio-economic reporting). In the best case scenario where the ARCC value does increase, this also increases the utility strength of the ARCC, as the ultimate function of ARCC is to act as debt-free micro capital for entrepreneurial investment.
2. We are already self funded by the founders.
ARCC hasn’t needed to raise money for our launch or launch activities, including our upcoming development, because both Sinjin and Stanley have funded the entire operations and continue to fund the operations with their personal funds. We have not engaged any mercenary type of services for the purpose of building hype for funding or price speculation, including that by our advisors and partners. Everyone on board with ARCC believes and supports the scope of our objective.
3. We are organically structured to grow; additional capital is great, but is not essential past our minimum target to raise.
Our model of growth and adoption is not dependent upon our price, as such, even if we languish in obscurity for the next two years of this crypto winter, we will still be fine.
Since we will be working off an existing chain, our main objective is to grow the strength of the network, and this simply means getting more active participants in our Social Proof of Work network and getting that socio-economic data. So, much like bitcoin in its early years, it is not a matter of price, but about securing the network. What this means is that early adopters will be able to mine (via Social Proof of Work) a greater number of coins, so the incentive lies simply in the number of coins. But as we organically grow, so should our price and the amount of coins mined will also decrease relatively.
While we are a social impact fund, as long as the structures are established for the currency reserve, development is completed for the ARCC Social Proof of Work platform and we have active investments, time will be on our side to grow regardless of the total capital we start with as long as we cover our set-up and operational costs. Which as it stands we can do that already.
As we have a 40 year monetary policy, this also includes a continuous mint function for the 40 year period of 18 years at 20% and 22 years at 5%. The usage of the new tokens will be not as treasury, but for adoption, community development and value alignment. While most projects in 2017/2018 had opted for a single mint to cater to the investors’ need for clarity of a finite supply for the effect of price scarcity, this also limited their ability to grow in terms of giving them the option to release x amount of supply and then release more supply as the price grew. Our model does not preclude us from doing another strong raise in the future when the market may be more favorable as well as when our product side is more mature. Backed by a community that shares our same long term outlook, we are a project apart from the speculative phase of this industry.
4. We already have our operational partners in place.
Our partnerships will be announced over the following months, but they are already in place. From our currency reserve, to investments, to our exchange partners, we have both the technology and financial operational partners to succeed as is with ARCC. These relationships come from the founders who have drawn on their extensive network to support ARCC.
5. We can launch a market ready product that utilizes our token within the year.
This will be the biggest criticism of our project from those individuals on the blockchain technology side: that our project is not pushing decentralized blockchain technology in terms of new innovations. But coming from a Korean gov’t commercial technology background, I can say that while we may not be pushing core blockchain development, we will be pushing for the adoption of existing blockchain development through our ARCC Social Proof of Work network/platform as a decentralized economic use case.
What this means is that our product objective is to use whatever technology there is, centralized or decentralized to meet the product requirements for adoption. ARCC will transition to new blockchain innovations that are secure and can scale. We may even become a test-bed that requires a sizable user base for these new technologies in the future.
This is to say that we do feel that blockchain technology is still in its infancy when it comes to mass market adoption capabilities, but the ARCC Social Proof of Work App/Platform will be developed like a decentralized exchange in terms of how it functions for the initial launch. Our main objectives in applying blockchain technology will be in the auditing and voting functionality to start.
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And finally, what will it take to make ARCC a successful launch in this environment?
As we start the launch of this project, our main focus is in creating a healthy, well informed, active and educated community that is focused on both long term expectations, and the idealistic but worthy objective of making a social impact through cryptocurrencies.
Ideas are powerful, but they only come to life within a community that really embraces it. This is especially necessary for the scope and scale of our project, as it will need the social proof of our global community that can not only understand, but defend and push forward our agenda through discussion, constructive criticism and active participation.
Unlike many of the projects in 2017/2018 launched in this space, we have not adhered to the formula of marketing hype. Our website was the last major task and our social media coverage is just getting started, but in this cold crypto winter, it won’t be the shine that matters, but really the heart and on the ground experience. The founders are all over 40, and we aren’t interested in a lambo or being crypto rich, we are husbands and parents, and have been part of massive multinational conglomerates as well as start-up founders and investors. We know that with a project this size, you can’t envision and plan for everything, and we can’t just boil things down to a smart contract and a telegram community of fake users. Rather, we are prepared to grind it out step-by-step to ensure that our project is a success.
We’re not hating on the 20-something lambo founders, but we are saying that if we are going to get through this crypto winter, the old, experienced and dedicated hands may have a better shot at this in this environment. The contribution of 2017/2018 of the alt-coin space to bring us to this point has been immeasurable in terms of awareness, participation and the advancement of ideas. This is all good, but to keep approaching a project that same way in 2019 isn’t going to work. But, let’s not throw the baby out with the bathwater.
The ability to create massive awareness through community building on Telegram is a phenomenal aspect of 2017/2018, as well as the education that has happened to this point. The achievements of the actual launching and soon to be launching of multiple chains such as Dexon, EOS, Tron, Telegram and of course the source of it all, Ethereum is immeasurable, these are ideas brought to light from the community. Even the ability for us to launch is all attributed to the achievements of these pioneers to push the industry forward. As we take this step forward, we look at these chains and the continued relevance and potential of bitcoin as the basis for what we hope to do next: empower the urban working poor in emerging markets and tackle the most pressing problem of all, systemic corruption. This is all made possible in a decentralized economic framework.
So I’ll end this post by saying thank you to all those who have contributed and continue to contribute to bitcoin and all alt-coins to bring us to this point. Because after this crypto winter, there will be a crypto spring.
Sincerely,
Sinjin David Jung
Feb 4th, 2019
