ICOs are a SCAM – They are NOT Bitcoin

Before I tell you why I have a problem with ICOs, I need to fully disclose that I currently mine Ethereum and Bitcoin and have extensive holdings of both cryptocurrencies.  I love cryptocurrency and believe the future is bright for digital currency when it’s properly backed and supported.

Unless you’ve been hiding under a rock, you’ve seen the meteoric rise of Bitcoin.  In December 2017, Bitcoin was on the brink of selling for $20,000 a coin.  Considering the fact that a year prior, Bitcoin could have been purchased for under $800.  Although the market has had a massive correction, scammers have come out of the woodwork to sell their own crytocurrency and inaccurately compared their Initial Coin Offering (ICO) to Bitcoin.

To be completely fair – I would have probably said Bitcoin was a scam back when it first came out in 2009.  It wasn’t backed by any major investors or institutions.  Nobody was accepting it as a form of payment for hard goods.  It was, for all intents and purposes, monopoly money.

Fast forward to 2018.  There are major institutional and amateur investors that are heavily vested in Bitcoin.   You can go to Las Vegas and buy hotel rooms and gamble with bitcoin.  It’s publicly traded on FOREX.  Whether you love or hate it – the fact that a person can use Bitcoin to do transactions with people all over the world means it has been adopted as a legitimate form of payment.

The success of Bitcoin has inspired a number of others who wanted to cash in on a “ground-floor” opportunity to come out with their own coins.  These are commonly referred to as “alt coins” in the cyptocurrency world.  A few examples of popular alt-coins are Ethereum, Litecoin and Bitcoin Cash although backers will argue these coins are just as good as Bitcoin.  In time, they may prove to be as good or better than Bitcoin.  At the time this article is being written, the jury is still out in terms of how widely these currencies will be accepted for payment.

The problem with every ICO I’ve evaluated… we’ve gone back to monopoly money again.  And while Bitcoin wasn’t regulated when it was introduced, the SEC is now stepping in and they’ve defined an ICO as a Security.  If it’s not registered with the SEC, a person or company making an ICO is in violation of Federal Law here in the United States.  Simply put, the cryptocurrency game has completely changed within the last few years.

Here’s the litmus test of an ICO:  Can you use it to buy goods or services you will need? Can you use existing mining technology to mine the coin yourself?  If the answer is no to either of these questions, don’t buy it as an “investment” expecting it to go up in value simply because of the magic word “crypto”.  Chances are, it won’t go up in value and the only people that will make anything are the ones printing the currency.

– The Successor

3 years ago

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