Nick Tomaino, a Coinbase alum who now runs crypto VC firm 1confirmation, gave in some wonderful piece of advice to crypto investors,
last week at Yahoo Finance’s All Markets Summit: Crypto in San Francisco, According to him, since there is an increased interest of investors in cryptocurrency since last year, a lot of people are just created coins and have a good social media gimmick (meme-based as he calls) and can raise a billion dollars ultimately tapping the investors.
Quoting Nick Tomaino
“How I describe most of these coins is they are meme-based currencies. In the past year, there’s been so much interest and fervour in this space that if you create a coin and have a good meme, you could have a billion dollars in market value.”
Understanding projects and its application is key to making money in Cryptos
There are at present 19 cryptocurrencies with the market value above $1 billion, but if you asked the majority of the investors, they would have heard of the top four at most: Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Bitcoin Cash (BCH). Even if they knew other names, most would not be in the position to tell what these coins or tokens were used for or how would they make money and be applied to businesses.
Most investors wouldn’t be in a position to tell that:
- EOS, which is the No. 4 coin by market cap, at more than $6 billion, and its blockchain only went live one week ago—and it’s already having problems.
- The No. 7 coin Tron (TRX) aims to be a blockchain for the entertainment industry.
- No. 26 Waltonchain (WTC) is a blockchain for managing supply chains, named for Charlie Walton, the inventor of RFID technology.
- No. 31, Basic Attention Token (BAT), applies crypto to digital advertising, hence the name. These coins do look of having a purpose, a long-term goal and yes could last if they stuck to the roadmap to be mainstream one day.
With these “maybe” useful coins, there were a lot sillier coins that were introduced what he calls “meme based”. Some of the examples Dogecoin, named after the popular Shiba Inu meme; Dentacoin, for use by dental offices; Unobtanium, so named for its scarcity compared to bitcoin; and Trumpcoin, created by Trump supporters.
If investors picked some of these coins they may not be able to make returns over the long term maybe even lose their capital. Are these meme based coins a problem?
“Why is that a bad thing in the short term? Because a lot of people are probably going to lose a lot of money,”
“Why is it a good thing in the long run? Because for every person that just cares about getting rich quick, there’s also a person that becomes more deeply interested in the technology. And that’s going to help the space in the long run.”
Also, read: Can Bitcoin Make a New High? Well Some Factors are in Favor
Crypto entrepreneurs hope that investor interest continues
If we look at the other side, the entrepreneurs running these projects are just keeping the fingers crossed in hope that the interest of investors and the money that flew in crypto businesses continues. As Crypto Market has already seen more than 50% of the market erode and regulations across various countries in dwindling state, a lot of investors have already fled the market.
That’s what scares the entrepreneurs, who want investors to look beyond mere price speculation. And when this gets coupled with scam coins the chances of investors fleeing away also doubles which is not good for the crypto industry as a whole.
According to other panellists, Dan Held, who sold bitcoin price app ZeroBlock to wallet company Blockchain in 2013 and now runs Picks & Shovels, which provides crypto portfolio tools to hedge funds
“I got involved in the space in 2012, so I’ve been through a few of these [price] cycles before. I think this one was really exciting because we saw mainstream finally come into space. Before, it was very hobbyist, very niche. I think that represents a fundamental shift in the type of people that are coming in to build products… So I’m really excited in terms of this next wave, what’s going to be built, and what crypto assets will rise and fall. And I think one thing we can bet on is that it’s going to be highly volatile.”
Well its nothing new and its sheer common sense that one definitely has a full understanding of what and where they invest. But in this mad race, people forget to apply the basics and hence end up losing their hard earned monies, in turn, blaming the crypto industry.
Will the common sense prevail in the times to come? Will this bear market fall take those people out who is in the industry for all the wrong reasons? Do let us know your views on the same.
The post Don’t Get Fooled by “Meme-Based Cryptocurrency” Says Nick Tomaino to Investors appeared first on Coingape.
Written by Nilesh Maurya @ https://coingape.com/dont-get-fooled-meme-based-cryptocurrency-nick-tomaino-to-investors/ June 23, 2018 Nilesh Maurya