Who’s Scamming Who?

If you’ve launched an Initial Coin Offering (ICO) in both 2017 and 2018 you’ll notice something very different about the experiences.

The first thing you notice is that there’s a standardized legal framework that has come to dominate the marketing of the big offerings you see today. While some say this is a positive thing, a sign that the scam coins of yesteryear are dying away, there’s also another observation that is equally valid: there is much less innovation around as a result.

Almost all White Papers read like something of a mixture between a bad securities’ offering and a condo presale brochure nowadays, and variation and substance within the content of legalese is thin at best. The other thing to remember is that not everything that starts out well is what comes to pass in a market. Some cryptos, such as Dogecoin (pictured) for example (now a Cryptopia base pair today) started life out as a scam. What happened in reality however is that the digital coin gained such widespread utility as a result of what then seemed an inordinate supply and a cheeky branding effort that it became, well, a regular digital currency. In today’s stiff collar ICO landscape there is no room for the Dogecoins of the world to emerge.

Second, the cost of listing your ICO has risen so dramatically you could be forgiven for thinking you were living in Argentina during the mid-90s. A year ago, one ICO listing site I know of was charging $2000 upfront and 15% of anything raised for a premium listing. Today, that same site is charging 40 BTC per month, about $272,000 plus funds raised.

That is an increase in base cost of 13,500%. Ironically, the site in question prides itself on rooting out the scams and identifying only “real” crypto projects. Presumably this is in an effort to look after their customers better and ensure the safe passage of their funds. But then, who is paying for their exorbitant fees if not those same customers, in the process depriving the “genuine” crypto project of what is presumably much-needed value?

This culture in Blockchain of identifying, rooting out, and naming and shaming scam projects has simply gone to lunatic proportions. It is quite frankly, out of control. Since the culture of institutionalisation has closed in on the Blockchain and specifically the ICO space towards the end of 2017, the crypto market is down by about 60% in value.

That is because there simply isn’t any innovation left now to invest into. Instead, crypto has become the mainstay of mediocre, and amateurish, copycat standardisation. Until such a period passes and the lawyers go back and start working for a living again rather than pontificating like C-list talk show hosts in the Blockchain press, there will be no substantial appreciation in value in the industry in general.

It would seem that it is these legal and brokerage entities who are the ones principally depriving everyone of what used to be exorbitant gains based on edgy, innovative tech. In that sense, the truth is that the real scammers in crypto are those that are pointing the finger first and calling out “scam” the loudest of anyone.

Daniel Mark Harrison

Daniel Mark Harrison is founder and chief executive of Financial Arts innovator DMH&CO.

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