In a recent interview on London Real, the Bitcoin and open blockchain advocate Andreas Antonopoulos talked about the wrong type of people entering the digital asset economy, and why many end up staying for different reasons other than price.
The wrong crowd
On the topic of the many hype-based cryptocurrency projects we see today, Antonopoulos said that the industry sometimes attracts the wrong type of crowd into the ecosystem.
“It attracts scammers, opportunists, pump and dumpers, and pyramid schemes, and the ICO market enabled a lot of those people to make their own coins.”
Andreas said that one of the reasons the ICO craze happened was because Ethereum made it easy for people to build a scalable, secure, transferable, and censorship-resistant blockchain “just by writing 20 lines of code”.
But the Mastering Ethereum author said that in the first 2017 wave of mania, people used these newly-created programmable blockchains “to build platforms to do massive pump and dumps” instead of building projects focused on privacy and censorship resistance.
However, he did mention that in the long run, “if you can fund start-ups with an international pool of investors, that can change the investment fields”.
FOMO is in the air. Newbies are joining the cryptocurrency space and falling prey to scammers.
Please educate your friends and family:
– Promises of profit are 100% ponzi
– Request to "recruit", "affiliate" etc are 100% pyramid schemes
– ICO/IEO are 99.99% pump-and-dump
— Andreas M. Antonopoulos (@aantonop) June 20, 2019
Not much short pressure
Regarding the parabolic rises and falls of many crypto assets, Andreas said that “nothing goes exponential without going down”, and that Bitcoin has done this eight times already as “that’s how it grows”.
“The reason it grows like this is that there isn’t much in terms of short pressure to hold it down,” he said.
“If you’ve got something that has limited supply and you suddenly have a speculative mania that blows up, it will continue to go up in a straight line, which only further fuels the mania.
“Until it reaches a point where there simply isn’t anybody else who feels just as enthusiastic and it pauses for a second, the panic just drives [the price] down.”
Damaging the community
Andreas said that there’s “no difference between speculators and investors” and that they’re just speculating with a different risk profile, with some of them doing so “with very little research and information”.
He said that the reason this is bad is that “a lot of good, innocent, and slightly naive people lost a lot of money” and had their lives destroyed because of this.
This has a negative effect “as it changes the community” and “causes damage to the community”.
“You have a lot of drama that comes up when there’s money on the table – people’s personalities change.”
He said that people start taking shortcuts and their ethics become compromised – “power corrupts, money corrupts”.
Staying after the price crashes
Andreas said that the majority of people first got involved in crypto most likely “because they heard that it’s some kind of investment opportunity”.
He made the case that even though many of these people may have first entered the space “because of speculation and mania”, the people who were only motivated by price left during the 2018 crash, with those who stayed “finding other motivations”.
He claimed some of the reasons why people stay is because they like the community, they understand the technology, and they may even be “driven by the political implications”.
To those people, Andreas said: “Welcome, you may have come because you want to get rich – that’s okay. Now let me tell you about why you should stay because of the technology even after the price crashes.”