In a world driven by hype and FOMO [Fear Of Missing Out]every day it becomes clearer that the diligent crypto enthusiast needs to have a litmus test for choosing a token to support in a world where real sustainable projects are hard to find, and good projects with long-term prospects are even harder to distinguish from money-grabbing ‘shitcoins’.
With recent developments where most new cryptocurrencies are hitting record lows and new ICO projects not living up to their post-Crowdsale hype, it is now common for disappointed ‘investors’ to go around blaming ICO promoters on social media instead of blaming themselves for they didn’t do proper due diligence to pick the most likely winner after the crowdsale before purchasing the tokens during the ICO.
From my extensive observation, it seems that most cryptocurrency buyers simply bought the coins during the ICO based on the FOMO (Fear of Missing Out) created by the hype masters behind those coins. Many simply bought without understanding the post-ICO purpose of the coin or what the token was supposed to do after the Crowdsale. When nothing happened after the ICO, as is often the case for many ICOs now, then they would jump on social media and scream bloody murder.
Recently, me and my team just finished a tour of Africa and some parts of the US to promote the Nollycoin ICO. We have organized and sponsored various conferences, held live AMA (Ask Me Anything) press conferences, and held many one-on-one meetings with crypto whales, small investors, and aspiring crypto millionaires of all stripes.
Through it all, one thing that amazed me more than anything else was that MOST token holders had NO IDEA about the underlying business or project behind the token sale they were participating in.
Even stranger to my observation was the incredible fact that many couldn’t tell you the value proposition of the project, its goals, or the company’s plan to disrupt the market and grab a share of the customers in its industry. They simply bought the ICO because several telegrams or Facebook pages they visited told them to ‘Buy’. Go and buy more’. Most simply acted on herd instinct rather than objective deliberation.
Now, if most of the people I met were just teenagers or people with no education, I wouldn’t be so surprised at the level of ignorance of many of the crypto ‘investors’ I met. On the contrary, many of those I met were university-educated and wealthy people. However, less than 10% of them could clearly articulate why they bought the coin expecting it to increase in value over time. Everywhere I went, very few people in the crowd could tell me the name, experience, and abilities of the corporate managers of the company selling the coins.
The only thing most of them could point out was that the coins were recommended by ‘respected’ influencers, while the facts showed that most of them were paid to create FOMO and reputation for otherwise useless shitcoins.
Apart from the so-called fake influencers, all that many cryptocurrency buyers knew was that the names of the team leaders were Russian, Chinese or Korean, even though they knew absolutely nothing about them. As if all you needed for a successful ICO was to list the names of people from Korea, China or Russia that no one could verify with a simple Google search.
While I agree that there are many things to consider when deciding whether a project’s tokens will increase in value over time, I think the acid test and most immediate evaluation criteria should be the utility of the coin itself beyond what would happen in crypto exchanges.
Although most crypto token holders I’ve met didn’t even know it, the reality is that if you bought a token from most ICOs, you weren’t actually ‘investing’ in that company. You would not buy shares in the company and you did not buy any securities from the company.
And at best, what you were doing when you bought tokens during most ICOs was ‘donating’ to a project in exchange for receiving a useful token or coin that legally had no real value outside of the business ecosystem controlled by the issuing company.
In other words, apart from your hope that the price of the token will ‘glow’ or rise and make you a millionaire, there is nothing else you can do with the token other than enjoy the utility that the ICO company attaches to it, if any.
Since no one could predict with certainty how Crypto will perform on the crypto exchange when it finally gets there, and recent experiences have shown that the prices of most tokens will most likely fall in the first few weeks of coming to the exchange (due to heavy selling by speculators), there was it would make sense to look at what other value or utility you could derive from your token, other than the expected stock market ‘craze’.
As the crypto revolution has continued to evolve, change and adapt to different market movements, the only way to ensure your money doesn’t go down the drain is to make sure you can still use those tokens for great value and convenience even if you could sell for profit immediately on the exchange.
When making this decision, you must ask yourself this primary question: What is the value, product or service that the company selling the token is creating that will give me enough value for my money to make this purchase worthwhile?
In a world of falling token prices on various exchanges, the more opportunities you have to get real use for your tokens outside of the expected listing on a crypto exchange, the better the chances are that you won’t be frustrated or stuck with tokens that are useless to you.
So you have to ask yourself again and again: IF this coin was never traded on an exchange, would I still be happy to support the vision? If this token has lost 70% of its value on an exchange, can I still use it and get value for my money elsewhere?
If you couldn’t answer these questions positively after reviewing the WHITEPAPER and investing the company’s claims, you should think twice before buying that coin.
A recent case study
Take a current ICO like Nollycoin which is a token that powers a Blockchain enabled movie distribution ecosystem. Coin promoters have created different user scenarios for coin buyers to ensure that their backers and token holders will have a laugh, no matter what happens with Nollycoin on the crypto exchange.
Some of the great useful features related to the Nollycoin token in the Nollytainment ecosystem include
• Ability to use Nollycoin tokens to watch exclusive movies in theaters and movie houses
• Ability to use Nollycoin tokens to access thousands of movies on their Netflix-on-steroid blockchain Movie distribution.
• Ability to use Nollycoin tokens to purchase products and services in NollyMall which is like Amazon’s platform for entertainment based products.
• The possibility of using Nollycoin tokens to pay school fees on the NOLLY Academy platform and partner companies
As you can see, beyond the usual expectation that tokens might be listed on a crypto exchange platform, you need to look beyond the hype of the icon, the current and future utility of the token and the viability of the underlying project behind it.