Since the meteoric and orgasmic rise of Bitcoin last summer (2017), I have had a fair few friends, family, associates, and complete strangers grill me about cryptos and in particular ICOs. I guess the reason being is that I've been into cryptocurrencies for a few years now and so I have become the crypto go-to guy for all these people.
Last night I had a conversation that lasted the best part of an hour and a half. I was telling a friend why he should steer clear of the particular crypto project that he was telling me about.
He was very excited because he'd met the people behind the project, and they had even offered him a percentage cut if he could help them raise money from their ICO. It struck me that the advice I gave him, is oft-repeated advice, and wouldn't it be good if the next time somebody asks me, I could simply point them to this article, so here we are!
Stage 1 - Defining Reality
Check Out My Huge Block!
Gone are the days when a new crypto can impress with its speed and size, the 'Check out the size of my impressive block(chain)' are well and truly over; were they ever even here?
Seriously though, if all an ICO has to offer his 8mb block size, and 14 quadrillion transactions per nanosecond, just smile politely and back away slowly (or rather quickly).
Now don't get me wrong, the graphene blockchain upon which our beloved Steemit sits, is a fast chain, with super impressive block stats, however it does not exist as a vehicle for those statistics, which brings us nicely onto our next point.
What's In A Product?
So the days of trying to impress you with the blockchain is (hopefully) over, now any decent crypto worth its salt must have a product behind it.
That's right folks, the coin itself is not the product, or at least shouldn't be.
So here's the first question you should ask yourself when trying to evaluate whether to put your hard-earned cash into an ICO or even just a crypto in general.
Does the project have a product?
Answer yes: Continue to next question.
No: Around 95% of your interest should evaporate, prepare to move onto next project.
Does the product exist now; or will it in the near future?
There are many projects out there with pending products, some are real, some will never come to fruition. So once you have established if there is a product, you need to know if it exists now.
If for whatever reason it doesn't exist yet, then you have to find out if there's a beta version, and here's the million dollar question:
Will the product launch BEFORE the crypto token sale?
This is just another way of asking if the product exists, but it's worth asking in this way, as a lot of ICOs try and pull the wool over your eyes when it comes to this. Not mentioning any names of course [cough] Synero [cough].
Stage 2 - Identifying Real World Actions
OK, so now you've established that the new WhizBang Coin has an amazing new electronic nose trimmer that is going to change the world for owners of hirsute nostrils the world over. The next question you need to ask is:
Is the success of the product in any way linked to the success of the token?
This is a very, very important question, because it's all very well and good if the company has the most amazing product in the world, however if the purchasing of that product does not effect the crypto, then it is pointless.
There are MANY CRYPTO PROJECTS LIKE THIS!
In fact I'd say most crypto projects (with a product) are like this, they show you their shiny new electric nose trimmer, which is revolutionary and amazing, it will sell millions, no billions!!!
So buy the coin right?!?!
NO!
Because they haven't demonstrated how selling every person on earth a nose trimmer will effect the price of the coin, because the profits have nothing to do with the coin.
In other words, the product can do well, while the coin tanks. The only reason anyone will buy this coin, is because they think that somehow the profits of the company will rub off on the coin, this may be the case, but is a vanity coin something you want to risk your cash on?
The Tunnel Of Yeses
This trick is often used in ICOs to make you think that real world actions are going to be linked to their token.
It goes like this, I say a bunch of things that you have to agree with, because they're true (unless you're being pig-headed), and then at the end I tag on another statement which is at best questionable, but nonetheless it gets to bask in the reflected glory of all the truthful statements that have gone before it.
These statements often come in the guise of an 80 page whitepaper.
The sun isn't a ball of ice.
Computers are running more and more of our lives.
One day there will be an artificial intelligence.
We will go to Mars at some stage in our development.
The sea is wet.
Deserts are hot.
Cryptogee is a handsome god-like figure.
The new WhizBang Coin is great.
See what I did there?
It's crude, however this is what practically EVERY SINGLE ICO is doing right now, and they are doing it a lot more subtly than demonstrated above.
You have been warned!
STAY TUNED FOR PART TWO, IN THE MEANTIME LET ME KNOW BELOW THE MOST LUDICROUS CLAIMS YOU HAVE HEARD ICO PROJECTS MAKE!