ICOs, DeFi, NFTs... Are We Stuck in the Same Loop?
Hi there rebels!
I am still figuring out the best format for this newsletter and gave myself permission to experiment a little with it, so hope you’ll be up for the ride until we find our sweet spot.
This week’s issue will be different.
So no meme coin story for you this time (sorry not sorry degens!)
Last week I was at the NFTUK event. NFTUK is one of my favourite communities out there and their monthly IRL meetups are awesome.
When I go to those I always make sure I speak to at least a few people I’ve never met before. One of those conversations last week made me think a bit and became a base for this issue.
It all started from an innocent question
“I’ve not been closely following the space since the ICO times… what has changed?”...
Me being so wordy and passionate about everything I love and hate in this space… ended up speaking to that person for quite a long time… while the answer could have probably been just one short word “nothing”...
Why is that?
I’ll share my thoughts the poor guy who probably regretted asking the question had to listen to but for that we gotta go back to the ICO times first and walk to where we are at now.
ICO origin story
Back in 2012 a guy on Bitcointalk published “the Second Bitcoin Whitepaper” that basically spelled out how ICOs would work … but 17 months later still no one had tried it.
Then at the 2013 San Jose Bitcoin conference that same guy (J.R. Willett) was a panelist and spoke about it publicly. He did finally launch the first ICO, Mastercoin (later called Omni) in the same year.
Little did he know it would be five years before the idea in his white paper would become a runaway trend. It would be built on Ethereum instead of Bitcoin, but would represent the same concept nonetheless.
So in basic terms what was an ICO?
Imagine if Kickstarter and the blockchain had a baby… well that’s what it was!
In short, it was a crowdfunding model where instead of “real money” people contributed cryptocurrency (in this case Ethereum).
What did they get in return? The token issued by the project…
So why was that good?
The whole beauty of the concept was that it completely democratised funding and investments.
There were no gatekeepers and middlemen in-between – anyone from anywhere could raise money and invest in ICOs.
People with great ideas and dreams no longer had to be in Silicon Valley chasing and begging VC funds to hear their pitch to get a chance. They no longer had to give up part of their company and shares… and eventually risk losing control over their vision and the way they wanted to do business.
Now everyone had equal chances to raise money for their project by issuing their own token…
And that’s what they did, raising $2 billion in just the first nine months of 2017 and leaving venture capitalists fretting about the future.
So from the tech side of things – everything was working smoothly.
You can only imagine the feeling one gets while refreshing the Etherscan page and seeing 1mln+ in a matter of minutes… It was just mind-blowing!
It all seemed perfect… but in that case why did it all eventually go to shit you may ask?
Probably more than 95% of those projects are no longer around and all those tokens are completely worthless now…
Who is there to blame?
Years ago I had the privilege to interview Andreas Antonopoulos.
And when I asked him
How much do you think is the human factor? I have a feeling that it’s not so much about technology, but just human behavior, human psychology, et cetera…
His answer was…
Absolutely. I mean, it’s all human behavior. The technology here is simply an expression of human behavior. All of this technology is hairless apes, trying to figure out how to organize societies that have scaled beyond a tribal level – and they’re using tools and making tools.
That’s what we are. We’re hairless apes that make tools and the technology itself, is influenced primarily by our human behavior and all of the bugs that we carry. In our biological nature we have all of these cognitive biases. We have all of these blind spots and they’re inescapable.
So for where we are now I’m completely blaming human nature and specifically one of its traits: greed.
And this is valid for both sides… projects found an “easy” way to raise money and were ready to promise anything just to get it… money that they did not need for building the project, but money that they just thought was a nice number to have.
Token buyers no longer cared about the project and did not even read the whitepapers (i.e. the promise) as long as they thought that the token would moon and make them rich overnight…
As a result, it was no longer a space where ideas were competing, where the tech was competing, and where teams were competing to become token buyers’ choice.
It became a space where almost 100% of the success of the ICO depended on marketing. Not even real marketing – the “marketing” in its worst sense – hype, exaggerations, paid fake influencers, and all that stuff…
That led to many scams, a bad name for the whole space in general, many people who gave up investing in ICOs – the market crash..
… and all those disappointed moon boys, who did not get their Lambos.
Cycle closed and we entered the crypto winter brought by the bear.
Now knowing what happened back then - tell me the next few cycles were not exactly the same.
Please convince me that it was not the same story all over again… since I kept having those Deja Vu moments with each cycle.
DeFi Summer… NFT PFP craziness… kind of new but still the same old.
The same story of the tech that works, unkept promises and greed screwing it all up and bringing back the bear market and the cold wind of the crypto winter blowing at our face.
Over and over again…
So if you were in my shoes at that event and were asked what has changed in this space since the ICO times what would you say?
As long as we keep doing the same thing the same way we will keep getting the same results.
Who’s gonna break the cycle? Who’s gonna finally learn from the mistakes and not become yet another painful Deja Vu?
I’m rooting for whoever that may be and hope it happens soon - since I’m cold and I really hate winters.
That was all for this week. Stay warm!
P.S. I am going to have a surprise (in fact 2 surprises!) for you next week so make sure you’ve signed up to this newsletter and follow me on socials!