The pandemic irresponsibility: transforming ICO into financial bugaboo
The latest massive attacks on ICO in media hint at a certain conspiracy. It seems, there should be some entities or certain forces who are interested in compromising not a particular crypto project, but the very method of token sale. Without applying any factual argumentation many observers, bloggers, and the so-called crypto gurus are trying to convince a wide audience that ICO is a ponzi scheme where the greedy scammers offer zero-valued crypto assets to the even more greedy speculators. The only iron-concrete argument they use is the amount of money the ICO initiators collected during the last six months or so.
“This is the pure bubble that will inevitably have to burst” is the message of numerous analysts. Another “argument” appeals to rather emotions than to common sense, “It is impossible to earn $800M honestly in such a short period. Besides, no respectable banks, VC funds, and State regulators are involved. This is sheer anarchy, why doesn’t the government do something about this?!”
The only issue regarding which they are actually right is that the core idea of ICO (as well as the major principle of the crypto economy) belongs to anarchy, to the crypto anarchy. This is exactly what burns the faces of the centralized authorities who are used to keeping control over everything related to the economy. They always hide behind the good intentions seemingly caring about the “average investors” who can be cheated out of their money by evil scammers.
The thing is that the numerous token holders and crypto speculators can manage to make, spend, and lose their money without having to explain themselves to the governmental bodies, banks, and other centralized entities. And the crypto projects whose successful ICOs demonstrate the rapid fundraising leave VCs and the old-school “credible investors” out of the game. Such a financial independence of the “pathetic humans” makes the fat cats very angry.
Of course, crypto economy is shaking the foundations of the old world order. In attempts to defend itself, this old order intimidates people by the chaos to which crypto economy allegedly leads. In fact, crypto leads people to the pure market economy capable of self-regulating, not to the chaos. Is the crypto economy soft and nice? Not, of course, since the conscious choice and self-responsibility are required from each individual to play that game.
The roots of any scam or financial fraud are grounded deeply just in the old monetary system where people and money are separated by banks. Such relations are obsolete because there was no hint of the democracy in the days when people invented money and banks. The new type of relations between people and money is what the crypto economy offers.
This is 100% pure democracy when everyone decides which coin is to be used to pay for one or another product/service. Instead of banks and the State bodies, just the network effect determines the position of each crypto coin. The growing price of Bitcoin, for example, reflects the power and popularity (aka network effect) of the Bitcoin’s blockchain. Presidents, bankers, and governments are powerless when they are trying to affect cryptocurrencies. This is how the decentralization works: the opinion of any centralization bigwig is either meaningless or equal to any other “humble opinion”.
The attempts to compromise the blockchain technology as such have failed. Nobody can blame any technology in the drawbacks of societies. The nuclear weapon, for example, is pure evil. So what? This is just a technology, and each society is to decide whether it should be praised or cursed. But despite any opinion, the nuclear technology exists in the form of bombs and missiles.
In contrast to blockchain, ICO is a social phenomenon which is much more sensitive to the opinions, compliments, or critics. That’s why various centralized forces shifted their criticism efforts from blockchain to ICOs. The general message of such criticism can be articulated as, “Stop investing in tokens because you cannot predict the future of the projects who issued those tokens”.
At the first glance, it sounds logical. Indeed, we live in the reality where the future is questionable by default, and a guess as to the fate of any crypto project looks like tossing a coin. On the other hand, the very unpredictability of the reality equates crypto projects with any other human-made phenomenon in this world. What is the principle difference between investing in tokens at ICOs and buying stock at IPOs? Both processes belong to some kind of gambling. How can the State regulation prevent any stock from falling at any moment in the future?
It means nothing when a coin is just minted. Me, you, and whoever else can mint a coin anytime in several clicks. At this stage, any coin can have only a declarative value determined by the coin’s issuer. But actually, the value is zero. The very public recognition gives a factual value to any crypto asset. That’s what the ICO is for. A crypto project is saturated with user expectations when its tokens are purchased by the ICO participants. Since that moment tokens have gained the real value being pumped with the real money.
Asking why Tezos, for example, is valued in $232M is equal to asking why Facebook is valued in $500B. Nobody knows. This is a public convention — peopled agreed to value them so. And this is enough to make a decision whether to buy, hold, or sell their assets no matter whether the assets are crypto or non-crypto. The product standing behind the ICO of Tezos cannot cost $232M as well as the actual product of Facebook cannot cost $500B (equal to the annual State budget of Spain, by the way). Does it mean that Tezos and Facebook are scammers? Not at all. Because not the product or a technology determine the value of any project, but the people do.
Another issue is the lifespan of a crypto asset. What or who will determine its duration? The only objective thing capable of doing it is evolution. Evolution implies competition, and the most fitted will survive. In the long term, the economy built upon some technology is beatable in principle. The quantum computer will annihilate crypto economy most probably.
No scam or fraud is needed to destroy some project and to devalue its assets. Just recollect Pebble Watch — the Company has left the stage of the smartwatch sector not due to defrauding customers or because of any other illegal activity. Both Apple Watch and Android Wear have competed Pebble thanks to mere technological superiority. And if Pebble were a crypto project, their tokens would fall at exchanges most probably. On the other hand, the network effect empowered by the Pebble token holders could keep the Company afloat — the equally probable possibility. To be frank, I’d prefer the latter…
The nowadays fancy practice of scolding ICOs is a bad manner reflecting the pandemic irresponsibility covering many crypto gurus. What are you doing, guys? Discouraging people in taking part in ICOs you are affecting the network effect — the backbone of the whole crypto economy. Criticize the certain crypto projects if you see some fraud in them. In any case, the evolution and free market will regulate out everything.
Propagate crypto instead, explain nuances to beginners, share your knowledge and experience to improve the agenda and workflow of crypto economy. But above all, don’t deprive people the chance to practice token investment even though it implies the trial-and-error approach. Consider the consequence of the State regulation in crypto — we all will be shifted from the numerous financial opportunities by a bunch of the corporate fat cats.
Are you really bored of liberty?