Rehashed - #9 Parties and Pitches: The Cryptocurrency New Norm
New York Blockchain Week
New York Blockchain week has finally come to a close. Cryptocurrency shenanigans were rampant; from Arthur Hayes’ Bitmex Lambos, to Snoop Dogg making not one but two after-party appearances, and Jaxx reportedly giving away a couple of Aston Martins on one of the many boat cruises that occurred this week. All of these antics suggest that the newly rich cryptoheads could do with a giant slice of humble pie.
Anecdotally, the sheer amount of marketing and project shilling at Consensus this year shows that the Initial Coin Offering (ICO) train isn’t slowing down anytime soon. I was approached multiple times to hear about yet another “revolutionary” project looking to raise in the hundreds of millions. And the stats back this up. Many believe that 2017 was the year of the ICO, where over USD $6B was raised. But between the Telegram and ongoing EOS offering, we are on track to surpass that number before we even reach the second half of 2018. I’m of the mindset that large inflows of capital help fuel innovation (as we saw in the dotcom boom and bust), but the amount of projects pitching ideas and products, with ridiculous self-valuations attached was concerning. Perhaps it is unsurprising then, that the market has bucked the typical May trend and has been largely unforgiving following Consensus.
It should be noted that many genuine cryptocurrency projects in the space kept a wide berth from Consensus, admirably continuing to stay focused and #BUIDL throughout the week. I’m of the opinion that such projects, often with zero marketing resources, can provide good investment opportunities, as they are primarily focussed on building product and shipping code; a real driver of utility and demand.
One of the most interesting sights that I observed at Consensus this year, was the presence of the Australian Trade and Investment Commission, who had set up a home base at the conference for all Australian-based blockchain attendees. It’s great to see the Australian government supporting local projects on the global stage.
Here’s hoping that New Zealand also takes the initiative to establish a presence at next year’s event!
The SEC Launches their own ICO?
The United States Securities and Exchange Commission (SEC) has pushed its support for the HoweyCoin Initial Coin Offering (ICO). HoweyCoin is a cryptocurrency project targeting the travel industry. As listed on its website, the HoweyCoin project will partner with all segments of the travel sector in order to create an underlying travel network leveraging tokens (HoweyCoins) that can be exchanged for travel goods i.e. flights or hotels, as well as, traded for profit.
What else do you need to know before investing?
Well, the ICO isn’t real. The project is fake; the cryptocurrency doesn't exist. Just like many other ICOs out there. Aptly named after the Howey Test, a method for determining if something is a security, the HoweyCoin project is an initiative by the SEC to educate investors on the dangers of ICOs. Would you have been fooled? Check out the HoweyCoin’s website to decide for yourself. Alongside HoweyCoins’ ICO page, the SEC gave a warning on ICO scams and outlined red flags to look out for when investing:
- Claims of high, guaranteed returns
- Celebratory endorsements
- Claims of “SEC-Compliant”
- Investing with a credit card
- Pump and dump scams
Is the SEC poking fun at a certain Floyd Mayweather here?
This move from the SEC deserves applause. Public sector entities are often criticized for being slow-moving and out of touch - which is obviously not the case here. While the SEC hasn’t yet decided on a rigid approach to tackling the ‘is a token a security?’ issue, it’s great that they are comfortable to put forth their signals of caution on ICOs in a fun and playful manner.
And such education is welcome in an industry where almost half the projects are scams or complete failures. Check out Dead Coins, to get a comprehensive list of deceased coins and exposed scams. The amount of dead projects and lack of accountability is truly mind-boggling.
While we hope for formal clarification from the SEC regarding treatment of ICOs, in the meantime, this is a creative way to raise awareness of the multiple bogus projects out there and may help to protect investors in the long run.
In the News
The Chinese government provided ratings on cryptocurrencies, which was particularly odd given Chinese citizens are actually banned from buying digital coins.
One of the more powerful companies in the world, Amazon, has launched instant blockchain products for Ethereum on its cloud computing platform AWS.
Goldman Sachs backed Circle, has announced USD $110m in funding from Bitmain and an intention to launch a USD pegged stablecoin.
Mobile payments provider, Square Cash, has been outgrowing its competitor Venmo thanks to a boost from Bitcoin.
CME Group launched two indexes for tracking Ethereum, spurring speculation that an Ethereum-based cryptocurrency futures product may be launched in the near future.
May 19-27 - Techweek NZ, events are up and down the country
May 22 - Stellar Meet Up in Christchurch
May 25 - Blockchain & Cryptocurrencies: Hype or Hero, hosted at Centrality’s Auckland office
Thanks for your company, stay tuned for next week’s edition of Rehashed.
View previous issue: Rehashed - #8 Crypto Markets: Sell in May and Go Away?
About the author:
Capital markets to crypto convert. From Christchurch → Boston → New York, Freddie became intrigued by the potential of the digital asset economy after plucking a book on Bitcoin off a New York library bookshelf in 2016. Her parents are thrilled that she is chasing magic money on the internet.
Disclaimer: The above references an opinion and is for informational purposes only. The opinions expressed by the author do not represent the opinion of BitPrime.