Beacon: The Exchange Myths
I hope everyone remembers the old lesson we learned when we were kids about having friends. You came home crying one day after school because you thought no one liked you. Your mother or father sat you down and reminded you that it was not the number of friends you had that mattered, but the select few friends that cared about you as a person. Quality over quantity; that was their message.
This message of quality over quantity has never been more important for cryptocurrency than right now. The market and industry is changing so fast, especially in the masternode niche. With the advancement of technology, an increase in technical knowledge among participants, easily clone-able open source code bases, and white label products, we have no shortage of supply of new coins as well as new exchanges to trade those coins on.
What could go wrong with an excessive supply of projects/exchanges and an industry where new, inexperienced investors are trying to decide where to put their money? ...a lot.
- The more exchanges your coin is listed on the better. More places for your investors to trade.
- New exchange listings expose your project to new investors.
- Your project is open source, once you release you no longer have any say in how investors use your coin.
- Free listings on new exchanges are a good thing.
Here is the deal, these things were not always myths. Number 3 in particular still rings true to an extent, but it is a half truth that still needs addressing. There is nothing more entertaining than having a person who has been involved in cryptocurrency for four or five years lecture you on "how things work around here." Unfortunately, most of the time, the industry has evolved around them while they cling onto the past.
So let's talk about each of these and understand why they no longer apply to our current industry conditions.
The More Exchanges The Better
This is a fun one because the intention is sound, but the implications are detrimental to your project. More exchanges is like diversifying. If something were to happen to an exchange (maintenance, technical issues, etc.), your investors have options to continue their trading activity.
One of the primary benchmarks potential investors look at when judging projects is if they have strong daily trading volume. If you are a small market cap coin, that trading volume is in short supply and yet, it is vital to bringing in new investors. Now if your coin has limited, organic trading volume (because you are ethical and do not manipulate volume), listing on as many exchanges as you can does you no good whatsoever.
Example: Your project lists on two exchanges, let's say Crypto-Bridge and Crex24. If you have 3 BTC in trading volume, you will have roughly 1.5 BTC in trading volume on each. This will put your coin in the Top 20 for trading volume on both exchanges as well as keep your price spread relatively small. This does not allow for wild swings in price. Take the same trading volume and spread it across six exchanges. That is roughly 0.5 BTC per. Significantly less impressive trading volume, especially for a new or small cap coin.
Cryptocurrency investors do not spend a lot of time looking at a specific project. Like a stop-loss, if they hit a red flag, they quickly move on. Low trading volume can be that red flag for many potential investors. In an industry where 'investor perception' can make or break your project, protecting your project from negative perceptions is a full time job. We will address this point further when talking about how open source does not mean you have no control of your coin after you launch.
Exposure to New Investors
But why limit investor access to your coin by restricting exchange listings? Honestly, you are not. But people will argue it vehemently. In cryptocurrency, investors already have an account on most established exchanges or setting up an account is relatively easy. If an investor truly wants to invest in your project, having to use one exchange or another is not going to be a deal breaker.
This myth of 'exposure' is not only exclusive to exchanges either. Shared Masternodes Services and other monitoring services use this very pitch to entice new projects to pay their listing fee (.5 BTC to 2 BTC plus a masternode) so you too can gain access to all the platform's other investors. Do not fall for it. They are a business and their job is to sell their product. Their job is not to sell your project to other investors. Pick your service providers wisely.
Ultimately, you are in charge of the success (or failure) of your project. After the first couple months, when rewards decrease and your ROI dips below 500%, investors will start to look towards your real progress and your development of the actual utility, or utilities. This is usually the place where project values begin to dip. So no, lots of listings do not expose you to new investors. Running a project that is strong, achievement-based, and interacting with your community each day attracts new investors.
Open Source Equals No Control
Just the other day, a new exchange I had never heard of listed Beacon. I will keep the name private out of respect. The listing was a surprise to me. I politely requested that Beacon be delisted. The person in charged was SHOCKED. Why would a project owner request such a thing? Because I know what kind of industry we are in and I do not know you or your exchange.
Open Source does not mean you lose all control as a project owner. If they chose not to delist Beacon, I would have made a public announcement to my community and investors across all social accounts to advise them not to use it. Regardless, as a project owner, you still maintain significant control over your coins and your project.
So why did I request delisting? Simple, really. First, I had never heard of them before. Second, we had no contact with them before the listing. Third, it was a free listing (addressing that next). Because we live in an Open Source industry, we find ourselves surrounded by scams. Scam coins. Scam exchanges. And even if they are not scams, many of them turn out to be very poorly run and either shut down or get hacked through a plethora of potential vulnerabilities.
As a project leader, I take it as my personal responsibility to protect my investors from any potentially harmful situations. This is the new cryptocurrency mindset that that particular exchange owner could not understand. Sometimes I come across as brash or confrontational because my chief concern is not my relationship with these service owners. My top priority is that my investors do not lose their investment. With that being said...
This one is easy. In life things that are free are rarely free. And in cryptocurrency, things that are free are usually a scam. I am not saying all things that are given out for free are scams. However, you need to be very cautious if a project is advertising it has "huge demand" and "thousands of users" and yet they are offering something for free. Business does not work that way. It is illogical. The only logic? You are about to lose whatever you put into their service.
I have a feeling some of this will not be popular. However, most of what I am saying is from observing multiple projects over the past year and seeing the promises made and promises unfilled. "You're going to see a bump." And when that bump never happened? I was watching.
My advice to project leaders: pick your battles. Be unique in your use, your approach, your marketing strategies, etc. Don't try to be too clever. Sometimes the beaten path is the best path towards success. When it comes to exchanges, this is especially true. Always trying to be different can sometimes get you into serious trouble. So remember, pick your battles wisely.
Like the protein shake and supplement industry, many of these myths are a product of the service providers who benefit from the myths themselves. "You gotta get protein in you within an hour, bro. This drink is the best for that." Yeah, okay, stranger at GNC with a polo and a name tag. The same sales pitch happens in cryptocurrency everyday. And the scams are getting smarter. As investors, you need to know what is myth and what is reality.
Be critical, ask questions, and understand that what some people call facts are just cleverly disguised sales pitches. Ultimately, real success is found in the people behind the projects who show up every day and put in the work. There is no short cut or replacement for the slow, arduous grind of real progress.
The Beacon Team
BitcoinTalk Ann: https://bitcointalk.org/index.php?topic=5059521.0