"The Power of Concept in ICOs"
The Glaring Boom
A bubble is a very simple, yet very important concept to understand for those of you who just started saving and investing. It is paying too much for an asset with very little intrinsic value. Or more simply put, it is the exchange of excessive value lacking merit.
In today’s age of innovation from uploading information into DNAs to creating real life Iron Man suits, we, more than ever, forget what type of world we are living in because of the hype going on around.
Ethereum was running around $8.14 the beginning of 2017.
After 6 months, Ethereum was 394.66 mid of June.For instance, we forget that an increase of 4,800% in a little bit over 6 months is--uhhh….quite unrealistic.
That's how we get our house!
Recognize your reality from other people's reality.
Uh...yeah. What about those who lost what their money?
The Doom
Now let’s analyze what happened here.
Quoting from The Economist:
ICO “coins” are essentially digital coupons, tokens issued on an indelible distributed ledger, or blockchain, of the kind that underpins bitcoin, a crypto-currency. That means they can easily be traded, although unlike shares they do not confer ownership rights. Investors hope that successful projects will cause tokens’ value to rise.
ICOs are, generally, more similar to crowdfunding than IPOs. When investing in ICOs, you are investing in vision and speculation, as opposed to investing in vision and performance.
The result??
In the past 7 months, 65 ICOs have taken place. Only 26% of which were funded for a total of $309,000,000 USD invested within the duration, averaging $12.8 Million USD each. Making the odds of being correct (statistically), 1 out of 4 (So..... for you to be right, that means you have to do 4 times as much research as you would normally on a booming market.)
That's a big problem.
Out of the 26% (17 ICOs) of the coins that were funded, only 1 is accounted for half of $309 Million -- yep--half.
That means..
Fund Strategy! I should invest in a minimum of 4 ICOs to account for historical data showing inefficiency, make sure I flip it and gain 400% my money back..
Really? Flip it for 400% gains? Wake up bud. Your odds get lowered. Sooo.. Nope.
Now it's clear that there is a factor that extremely differentiates these cryptocurrencies. Otherwise the average, if the biggest was taken out, wouldn't look so different from what it is now. These things do not happen by chance. Nothing is.
Let's try to understand what's going on here. To help us, I've gathered some information that could provide insight to who is investing where.
- At the time of this writing, only the top 305 currencies have market capitalization beyond $1,000,000 USD.
- A total of 122 ICOs will have occurred covering November of 2016, all the way to November of 2017.
- Most of the newly created currencies rely on any 1 or more of the top 50 cryptocurrency codebase, blockchain, or a mix of which.
- 86% ($90,220,146,103 out of $105,177,929,482) of all the money in cryptocurrency is in the 0.01% (or 10) of the biggest cryptocurrencies.
- The purpose of most new ICOs are aimed to create solutions for the smallest, slightest problems. Innovative, if you will, not necessarily efficient.
- The ICO that raised the highest amount within the past 7 months was Bancor at $153,000,000 USD.
- Not accounting for the failed ICOs, Equibit was last place raising only $550,000
- Both Bancor, and Equibit was built on already existing codebase or platform.
Based on the traffic data gathered from SEMrush, their 2 websites started quite differently.
Bancor Online Traffic
This shows that when the website was created(In this industry, the only marketing that matters is PR and your website.), it didn't have a lot of traffic unlike.....this guy Equibit below.
Equibit Online Traffic
Equibit is a subsidiary of the Equibit Group which was incepted on 2013. It started with some hype after telling the public about their plans for an ICO (Most likely due to the outflow of website traffic coming from their already existing website visitors).
Despite which, it did not hit the same levels of interest coming from the public compared to Bancor, a new company-only incepted on the 1st quarter of this year which did not gain significant traffic within its 1st 2 months but has closed a whopping amount.
Remember when we all agreed that nothing is by chance (We did didn't we?)?
The Market has spoken ladies and gentlemen.
It does not react to the technology differently (There are winners, and there are losers).
It's showing that the Marketing/Visibility does not alter the results of the ICO heavily.
It disciplines everyone who thinks that this bubble ain't gonna pop.
So if not technology, then it's the...uhh...people??
That's right! I mean, no. Not you. Not me. no.. no..
It's who's involved in it, and what they believe in.
I see this as a case of belief in the concept, targeting a specific market segment.
You see, we don't have any business owning anything other than Bitcoin (unless you're constantly buying stuff from the deep web, then it would be useful to hold some Monero and Zcash too). We don't need to own Litecoin or whatever coin right now. You can't exchange it for food, no commodity (not commodity like crude oil you fools), not even water. Everyone in here knows we are all speculating for capital gains, and we aren't in that mindset yet of buying low getting capital gains, THEN SPENDING IT FOR FOOD. There's not enough support, there's not enough infrastructure. We are just not there yet.
Think about it for one second. Do you really think that in a world full of speculators, the market is the people?
So who makes all the moves?
The Market Movers. Hedge Funds, Venture Capitalists, Billionaires, Large Companies and Governments
Case in point
Bancor targeted mostly financial institutions while leveraging on the blockchain system. BNT tokens had a direct use within their proposed implementation which offers heavy liquidity. Thus, offering a lot of potential for day-trading in a new investment vehicle lacking the complex and advanced tools and systems already existing in the ForEx Market and the Stock Market (Eg The “Electronification” on Wall Street). A clear advantageous angle.
Bancor, is like a Central Bank for Cryptos, where the capital (crypto or fiat) is used to back the new "smart tokens" to be created on the platform. Involves the functionality of creating a fractional reserve system that the “smart tokens” will follow (ratio between reserves and smart tokens to be produced). The value of the smart token will be based on the actual reserves within the platform and the ratio that will be set.
On the other hand, Equibit, targeted the General Population. Which is great in theory, but in reality will limit the potential. Trading on Equibit will be reliant on systems set by the founders themselves.
Equibit, a fork from the BTC blockchain. Serves as a blank stock certificate. Integrating the digital currency to a digitized stock certificate, to be signed by a company looking to offer shares. A replacement of the normal IPO gateway, and the exchanges where you could trade them.
Fact-check: Does it really look like the public could have found out about Bancor in 3 months, and poured in $150 Million USD? No. That’s why 83.96% of all the tokens after the ICO was sent to only 100 addresses.
It is clear that there are conflicting interests among securities brokers(or the intermediaries their platform was trying to get rid of), and their system. If Exchanges are replaced, the brokers are left with no upside potential. Only competition. Along with it, the Institutional investors who work with these brokers who do the actual trades and provide gains did not see this with great opportunities.
Aaand they end up with $550,000.
So you see, we are not in a bubble. We're in their bubble.
"Only when you find out where you are in life, can you move forward."
My conclusion
When you hear an ICO that everyone is telling you about, do not listen to any of them. There's a reason why not everyone makes money and a reason why only a few really break the bank.
The key is knowledge and you know it. Find your market movers and track their every movement.
Now that light has been shed upon where you are, take actions situated on those that truly matter. Know who your enemies are. You know there's money to be made and you also know that someone bought Ethereum at $393. Whoever was late, was late because they never decided to be early. Don't catch the shuttle dude. Never ever do that.
When you end up with a compelling research about a certain investment you intend to take action, do not share it with anyone but yourself. Be greedy.
"Greed for a lack of a better word, is good."
I'm kidding.
What I'm saying is, don't tell the world what to do. Instead, show them what you have done and why you did it. It's never your obligation to tell anyone how to make money in something they never bothered to learn about, but is in it. (This is my point of view, but is almost purely objective of course) See there's a famous saying in Wall Street..
"Do not lead the Sheep to the Wolves."
That about sums up my research, and the conclusions I came up with.
I hope you enjoyed reading a new take on our industry today.
I look forward to serving you my best content in the future (This is my first time posting long-form content so feel free to comment on anything that you think is right, or wrong with this.)
If you had a great time, please upvote and follow me @stjohngo.
GLTAH. May we all ever be vigilant in the cryptocurrency world.
I'm glad to see a thoroughly researched article on the crypto boom here that sprinkles in a heavy dose of opinion. There are too many articles on Steemit that just rehash basic news from a cryptocurrency blog. Upvoted & following. Cheers!
Thanks bud! Glad you appreciate. Personally, I'm not a fan of what's going on around here --
people just posting links from Coindesk or some famous website, then adding a few words -- making a couple of hundred dollars.
I'm changing that.
This is what you can only expect from me. Thanks for the support!
It's not all about speculation; the cryptocurrencies have real use cases that justify part of the valuation. Currently, the majority of the countries in the world issues non-fungible currencies. It's reasonable hard and expensive to move money in and out of China, Brazil, Malaysia, amongst others. If you are moving money to Brazil or China, you get a nice a fatty FX spread using cryptocurrencies. It accounts for two things: the cost of offshore incoming deposit and the demand as value reserve in those countries. The FX spread is as high as 20% in Brazil; so, an ordinary FX of USD.BRL of 3.50 for tier 1 banks would yield 3.30 for an average customer using traditional remittance systems but could get as high as 4.20 using Bitcoin or Ripple. Take into account that Brazilians and Chinese don't trust that much their currency, they would rather save money in an asset that governments can't control. The world economy isn't all about the western countries anymore; you need to mind the new actors. Everyone trading cryptocurrency does know that Chinese are the ones dictating the moves (crazy ones, by the way) in some major coins. Ethereum is going through correction now; there are real technical challenges and open issues, but this happened before for Bitcoin as well. I understand that for a great parcel of western investors the cryptocurrencies have no apparent value at all; that everybody is running after the Dutch tulips. People can move money from the UK to the US or from France to Japan with reasonable speed and cost using traditional remittance. But if you are such a person, remember that guys like me (Brazilian) can't move money quickly and cheaper from the UK to Brazil within traditional banking. You may not notice, but Brazilians are always top 5 foreigner spenders in the US, and Chinese are the top spender tourists of the world. Don't be restrained by your western closed box, raise your head and check around, that's my advice.
If moving a large sum from one currency to another isn't for capital gains, then it would be to retain your money's value. Still within the scope of speculation. I did not intend the article to explain all the uses of cryptocurrency. It is, without any doubt, a currency after all.
The point is to simply show who moves the market and show who has actually uses for the currency. Cryptocurrency was designed to replace fiat - to a certain scale depending on the token. Unless you could use ethers to buy food from 7 11, you have no business holding ethers other than profit, or retaining value, which is again, within the scope of speculation. Among many things, decentralization aims to control fees coming from fiat intermediaries. A great factor to lessen the barriers to entry. Although this is already advantageous, this was not what it was created for. It's not the jump from fiat to crypto, it's the use of crypto to commodities. Fiat is out of the picture.
Do not be mistaken my friend, my article does not tell you everything I know and I understand about cryptocurrency. It does not state the financial and economical advantages and disadvantages of which I am no stranger to. So before you leave a post or a comment, it would be best to realize that we are in Steemit. Meaning every word, sentence, paragraph, post is designed for a target audience. I appreciate your post brother. Thanks.
I never meant to contradict your article, but to bring a new perspective. I agree that ICO's are much hype without any real ground to stand. I agree that feel actors are pumping money in very shady investments. I see price moving to form billionaire market cap with a few trades with small amounts. But, tell me which cryptocurrency is more scammer than the CNY today? People are making hard choices as we speak. Your article is brilliant, don't worry. I am commenting it with my friends.
There is not a single point in my article where I say there is no inherent value in cryptocurrencies, which I both agree and disagree on. I'm Asian by the way.
I just realized, you have been responding differently on an article that has been meant for something else. I see that you have some personal experiences causing you to respond like that. Mind telling me what it is? I'm enjoying this so I'd like to keep this going if that's alright. Haha
And what's the problem? If I have been disrespectful, please accept my apologies. I just disagree that the world is only moved by big hidden agents. There are a lot of ordinary Chinese running from CNY to anything else that they can keep as reserve.
No it's all good bud. Don't worry about it.
Going back, that would be true. There is a lot of demand coming from the threats of hyperinflation. Then again, we all know the wealth distribution of such countries, and all other countries.
Realize that we are all living based on the will of a few people. For instance, over 50% of all bitcoins is held on less than 5% of bitcoin addresses. I doubt that we're still talking about people "plainly" getting out of fiat. We are now in a world of a few people.
Educational system was designed by them.
Financial system was designed by them. Banking system was designed by them.
It would be foolish to underestimate the level of macroeconomics existing in today's society.
Do you know how much of today's wealth is in the hands of the global elite?
80% is in less than 0 .01% of the population.
You know they make all the choices, not us. Now extrapolate based on that. If i was part of the elite and i decided to go bullish, how many of your friends would it take to balance the currency? Now do you think crypto is in that stage now?
long? I am sad it was not longer :) you point out many interesting things and I like your way of viewing the cryptomarket, for sure you made me more aware now
I'm glad I could add more insight. I'll be posting more in-depth analysis of our general industry and I hope I could influence the way people are making decisions about their cryptocurrency investments.
I see a lot of sad stories going around forums and posting content could open some ideas to people -- hopefully help turn things around just a little bit.
Good read, reminded me of the famous W.Buffet quote:
"Be fearful when others are greedy and greedy only when others are fearful”
...I still love trading ICOs though, they are so predictable.
Damn right they are! Haha.
My article was targeted for the people thinking about getting in on the "Glaring Boom". More of a reminder of what they should be doing, and who they should be following.
Thanks for reading bud. Just followed you. Looking forward to more of your articles.
Thx man, looking forward for more content on your blog too
Nice article
Yea, ICOs is the real deal
Thank you.
You're welcome bud. Anytime.
It was so long lol but Ima still like it
Thanks man. I'll get you something better in the future. Love the support.
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i enjoyed the reading, Axelrod
Thanks Moonwalker. I hope to serve you more of the best content in the near future. Keep Steemin' brother.
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