PS: You may not understand parts of this blog if you have not been following news about crypto currency
Somehow exams are always the time when you end up finding everything in the world interesting. Nov 2013 was different though, I had never found anything that was so fascinating and complicated, yet was almost unheard of. The more I read about it the more I understood how brilliant it was, and that’s how I was first introduced to the first major crypto-currency, Bitcoin.
When I first heard about it, the price was around $300 which seemed like an awful lot for something that was just a piece of code. Within a week, while I was learning more about the underlying technology (which was a quite a task in itself) the price flew (the word jumped would be an understatement) to about $800 and then sharply fell to $500 before starting another bull run.
That is the first time I felt the Fear of Missing Out.
By the time I managed to figure out how to buy it in India, it was $800 and I invested way more than I could afford to lose. This is the graph I was looking at when I was going crazy about it.
But then the price crashed, and stayed like that that for a loooong time.
I bought it at the wrong time and sold it at what I would still argue wasn’t the wrong time. Aarrrggghhh the regret still kills me. So what do you think I did after that? to avoid the FOMO I looked up a couple of ICOs, in fact got so convinced with the first one that I found, that I almost convinced myself to buy it! Thankfully I avoided that big mistake.
You see the technology is brilliant, (that is not something I’m gonna try explaining in this post) but the problem is that most people end up buying it when the price is high because of the FOMO. Sometimes they feel that rationally Bitcoin is overpriced so its now time to look for the underdog, i.e. an ICO. I’m not saying that its always a bad investment but please, please do some research before putting in your money in it. Public investment in such get-rich-quick schemes will ultimately shatter the confidence in crypto-currencies when they do end up crashing to the ground.
Take Steem for example, with its novel concept of “proof-of-brain” currency distribution system and instant fee-free transactions with no apparent scaling issues. Basically you get tokens which you can use to “vote” for a user’s content which is how the currency gets redistributed and because the concept is novel the currency is supposed to be worth something.
Imagine Facebook giving everyone limited likes which they can distribute based on the quality of content. (hate to use use the word “quality” considering the number of likes people like Dhinchak Pooja get) Well then maybe likes might be of some monetary value, because after-all who can resist the temptation to like that funny meme?
Reality though is that a small startup did that with some marketing mumbo jumbo like “Decentralized Block-chain” and now they are worth half a billion dollars!!! Just think about it, its just a social media website where you pay for liking content (which could have been any currency) but they created something new which people are paying for purely on speculation.
Or take the case of Tether; You know that a lot of people do not invest in crypto-currency because there are no “tangible” assets linked to them or some sort of backing; government or otherwise, so what do you do? Well simply tell people to deposit USD in your account, tell them that for every dollar you will give them a token which may or may not be of any value in the outside world. Market it by telling people that you have a crypto-currency backed by USD and Voilà, investors turn it into a billion dollar crypto currency!!
But of course, your path is to wealth is not that easy, you have also got to add
“There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money.” – Tether Website
To ensure that people who realize the scam can’t escape and also for good measure never let people know that the prominent members of the 2nd largest crypto trading platform founded this scam.
Check out this brilliant article for more info on the Tether scam.
You see, for a start-up this market is the perfect opportunity, instead of the never-ending hunt for funding from VCs simply add the word “block chain” to your bio and you get instant access to funds like never before. Its basically glorified crowdfunding. This is exactly why its difficult to get a VC on-boarded, because they understand the risks involved and they do a lot of research.
For those of you who don’t understand it completely please invest only in the top crypto currencies in the world, there are very few regulations that all these mushrooming startups need to adhere to. For those of you who have done your research, get in touch with me and let me know what you have zeroed in on! 😛