How to Spot and Tackle the Seven Deadly Sins of Crypto
For all of the good things blockchain and cryptos can bring to the world, there is also a dark side that can be explained through the Seven Deadly Sins.
For centuries, Christianity has identified Seven Deadly Sins (Greed, Pride, Envy, Sloth, Gluttony, Lust and Wrath), telling its followers that falling into them will lead straight to hell. However, judging by how human history has evolved since then — wars, slavery, poverty to name just a few — the road to hell has become an eight-lane highway! And this is particularly true in the tech world where not all ideas necessarily translate into better outcomes for humanity.
Think about the speculative bubble in 2000 when Internet start-ups raised billions of dollars from VCs and through IPO with business plans that focused more on the “P” (profit) than on the “L” (loss) side of the balance sheet. When the bubble burst and the cash burned, the day of reckoning came knocking hard on the door of millions of people who believed in the promise of tech but who ended up embroiled into a major global financial crisis.
Greed, experts said, was the main culprit of the exuberance that led to the crisis. The same experts are now warning about a similar speculative bubble in the blockchain and crypto space. While the fundamentals are different this time, some lessons can be extracted to avoid the pitfalls (or sins) that lead to a crisis of confidence in an emerging technology.
Vade retro temptation…
How can this revolutionary technology “do good” for the world and avoid the Seven Deadly Sins that have derailed other human attempts “to do the right thing”? Let’s look at them closely and bring them into our time.
1. Greed: Of all the Deadly Sins, this is the one that is the hardest to shake out in the blockchain/crypto space. It ravaged the dot.com boom in the late 1900s and it has the potential to do the same again. It manifests itself as ICO scams whose only purpose is to swindle investors of their money and true believers of their hopes. As of June 2018, over a billion dollars have been stolen through ICO scams. And as the number of start-ups looking for ICO funding increases, so are the number of scams. In a recent report, The Wall Street Journal indicated that out of 1,450 start-ups analyzed, more than 270 were “shitcoins,” or tokens created uniquely to rip off investors.
In an emerging technology, greed is not cool. It can make it or break it. Blockchain is about building trust not about swindling people in get-rich-quick schemes. A few bad apples are tarnishing the reputation of a lot of good ones. In order for blockchain to develop and for cryptos to be widely adopted, the circle of trust must be reinforced. If some people get rich on the merits of their blockchain app or service they create, that’s OK. If they are just in to fuel speculation and pocket their ill-gotten gains, that’s not.
2. Pride: Start-ups entrepreneurs who have successfully gone through an ICO and are developing game-changing blockchain apps to make the world a better place can be proud of their accomplishments. They serve as an inspiration to others wanting to find a place in this expanding ecosystem. However, if uncheck, success can turn quickly into hubris. When you think that your invention cannot be replicated or improved, when you adopt a monopolistic attitude to undermine fair competition, and when your shut down any views that challenge your own, this is hubris.
Turning pride into inspiration is a challenge. Sharing knowledge with others and staying committed to the altruistic values of technology is a good antidote.
3. Envy:Inevitable in any human interaction, envy manifests itself in the blockchain and crypto sector in myriad ways. For instance, many Telegram channels originally created to build a community around blockchain and crypto have become a platform to badmouth start-ups, undermine good ideas and promote dubious tokens. Envy also crawls into the very foundation of some start-ups where in-fight and “schadenfreude” among colleagues can mimic the destructive internal politics of the traditional corporate world.
Envy is what can turn healthy competition into a destructive race that hinders innovation and blocks efforts to build a community focused on common goal.
4. Sloth: Not all garage-born start-ups originate in the messy, confined space of their creators. And not all of these creators spend their days drinking high energy drinks and eating chocolate bars to stay awake 24/7, oblivious of their personal hygiene. In the blockchain and crypto space sloth manifest itself not so much on personal image but on whitepapers that have no structure, clear purpose, or filled with grammatical errors and assumptions. Many start-ups vying for funds to get their ideas off the ground go as far as plagiarizing content from the Internet or quoting dubious sources to present a whitepaper that will get them pass the ICO phase.
A well-written and fact-checked whitepaper is paramount in the blockchain and crypto world to grab the attention of potential investors and token followers. Start-ups should invest the time and effort in getting this right. If they don’t have the expertise to articulate their ideas, they should hire the services of an expert who can take them through the journey of writing a convincing whitepaper.
5. Gluttony: When it comes to gluttony, the first thing that may come to people’s mind is the excessive amount of energy that crypto and blockchain projects use to process transactions (mining). However, the real gluttony is the speculative bubble that has accompanied the rise of cryptocurrencies, particularly when the value of Bitcoin reached almost USD 17,000 in late 2017, displaying and incredible amount of over-indulgent behavior in this revolutionary space. The great majority of investors who drove the price of Bitcoin up, ended up registering heavy losses when the market stabilized. Their insatiable hunger for quick gains brought the entire blockchain and crypto sector to the brink of collapse.
The biggest casualty of this irresponsible behavior has been the reputation of cryptos as a more transparent and fairer alternative to fiat currencies and the system that supports them. Eight economics Nobel Prize laureates, as well as a number of high-roller investors and central bankers have warned the public to stay away from anything related to crypto. Fear and confusion hinder the ability of legit start-ups in the sector to tell their stories to the world.
6. Lust: Each new technology brings a promise. Developing that promise can become sometimes a fixation that clouds reasoning. In the ICO space, where the influx of new entrants matches the exiting of failed projects, many start-ups display an obsessive behavior that results in their demise. Lust takes a new meaning when a killer app or new service becomes a success bringing money and power into the equation. There are hundreds of examples in the tech world 1.0 — e.g., Nokia, Microsoft — where the lust for more has turned good intentions into monopolistic or self-destructive behavior.
Blockchain and crypto start-ups with teams possessing diverse opinions and backgrounds are better suited to wind stand the temptation of lust and remain focused on the big picture.
7. Wrath: Fury is an external element in blockchain and crypto. It comes as an immediate reaction to the repeated abuses of speculators and fraudsters that plague the space. It emanates from regulators or traditional financial institutions that want to curb or obliterate the technology to protect their own interests or just hide their lack of understanding of it. This angry reaction threatens not only the development of blockchain projects but also undermines the credibility of a burgeoning industry.
Just as with greed, building trust is the best antidote against the wrath and bad reputation currently associated with blockchain and cryptos. And trust needs compromise and time to flourish.
The eternal question: To sin or not to sin
From a purely religious standpoint, there are sins and virtues that rule human behaviors and actions. While one is conducive to a life of wickedness, the other leads to an enlightened existence. However, the path to righteousness is never a straight line.
Metaphorically using the Seven Deadly Sins as a guide to avoid the best-documented pitfalls in the blockchain and crypto space can seem as a stretch. However, it helps illustrate and underline the challenges the industry faces. The morale of the story is simply: “Technology is supposed to solve all problems. Blockchain and cryptos are supposed to make our lives more secure, transparent and fair. Avoid all excesses, stay focused and bring that game-changing idea to fruition.
THE RELEVANCE HOUSE is a full-service blockchain marketing consulting agency for startups conducting an ICO. The focus is to guide blockchain startups in building, designing and delivering a relevant brand and story. Because only relevance has impact. We look forward to hearing about your project. Contact us, we don’t bite!
