Like most emerging Internet based technologies, when blockchain and cryptocurrency first emerged, they were quickly embraced by the hacktivist culture for the power they promised to ordinary people to circumvent mainstream economics and break free from “the system”.
That was the same thing that happened with the World Wide Web nearly three decades ago. At that time, the idea that almost anybody could publish almost anything without interference, was a very exciting concept.
Libertarians rejoiced that a giant leap forward had been made toward universal freedom of speech, while simultaneously governments scrambled to find some way to censor, restrict, and regulate the new technology.
As the Web grew in popularity, corporate entities quickly saw the potential to make a quick buck, and moved in eagerly. Far too eagerly, in fact. The consequences were serious, and the Web has never fully recovered from the effect of this massive influx of commercial interest.
Before long, the Dot Com Bubble was born, and a few people became very wealthy, while a larger number of people lost fortunes, and some even became bankrupt. Some of those Dot Com companies were legitimate, while others were based on nothing more than a name.
Astoundingly even seasoned investors put their faith in Dot Coms without bothering to put much effort into finding out what those companies actually did. In quite a lot of cases, what they did was absolutely nothing.
Even huge corporations like Cisco were affected, and lost around 86% of their stock value during the time of the crisis. Though they’ve now recovered, others were not so lucky.
History repeats
All that craziness is coming back around now that blockchain technology is the latest buzz. What was originally a way to get around the restrictions of fiat currency and centralized banking systems, favored mainly by hackers, criminals, and fringe dwellers, is now being embraced by the corporate world in a big way, most especially by entrepreneurs eager to get in on the action.
There are many new cryptocurrencies and blockchain systems emerging, and the number will continue growing. Investors who choose wisely stand to make immense gains. Certainly anyone who bought into Bitcoin in the early years should by now be immensely more wealthy.
Buying into that currency now, however, is a somewhat risky move. Buying into any new ICO is risky, too. Just as happened with the Dot Coms, there has been frivolous speculation into cryptocurrency that had absolutely nothing behind it.
Investors who didn’t do their research or consult with experts have lost unimaginable sums on those failed cryptocurrencies.
Why you should seek expert advice
There are so many factors that could result in the success or failure of a cryptocurrency offering, and it is not always easy to predict what will happen.
The advantage of consulting an expert is that they will have the experience and knowledge to make more informed predictions than the average investor can do unassisted.
Going it alone
It is certainly still possible to get good results without assistance as long as you’re prepared to put some effort into researching the ICO before you invest in it. The most critical factor is to get a good understanding of who is behind the cryptocurrency on offer.
Bitcoin was an exception because right now nobody knows for sure who Satoshi Nakomoto is, except Satoshi Nakomoto and whoever Satoshi Nakomoto has trusted with that information. Certainly, nobody is spilling the beans just yet.
The reason it makes sense to know who is behind the ICO is that they need to have some kind of reputation at stake. The important and reputable a person is, the more they stand to lose if they fail. This means those who have high importance and high reputation are less likely to fail.
The next thing to look at is the stated purpose of the underlying blockchain and whether that makes any sense on a practical basis. If it doesn’t, then the cryptocurrency may be considered to have a higher risk than if it does.
This may all sound like it’s an overly cautious approach, but there have been more than 4000 cryptocurrencies issued, and many have failed to last more than a year. You need at least some way to sort out the genuine prospects from those that have no substance to them.
The much easier way, of course, is to find a trusted consultant who can give you informed advice. You should also consider diversifying your investment to some extent so that you have more options and lower total risk.
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