Can Anyone Explain Why Anyone Who Knows The Crypto Space Would Invest In TEZOS? It Received $250M Funding And Now Is Tanking Before Even Launching...
After over a decade working in and around internet business - working in a variety of roles (pretty much all possible roles) - I have noticed a repeating trend.. Namely, that where competition for investment in cutting edge projects exists, there will be large amounts of money given to projects that are less innovative and promising than to projects that are technically very likely to succeed if supported. Why?
Clearly there are numerous factors involved, but among them are:
- Awareness - Investors need to know that projects exist and their benefits in order to invest in them.
- PR - As an extension of Awareness, there needs to be strong communication between the project's operators and the wider public that allows investors to build trust and respect in the team.
- Politics - Who are the team involved? Are investors thinking 'These are MY kind of people' or are they thinking 'I don't know if I like these people'.
- Competing interests - Does the project scope extend into multiple markets? If so, investors may already be backing an existing project in a market that the new project also reaches into. Therefore, the investors might be interested by the project but not support it due to concerns about losing out on their other investments.
TEZOS?
I only heard about TEZOS a couple of weeks ago and from what I can gather it's a cryptocurrency that's main selling point appears to be that it incorporates a mechanism within the blockchain to manage changes to the system itself in a 'mathematically provable way'. I'm not 100% sure exactly what that entails - but other than this interesting claim, I don't see any significant benefit to TEZOS that is not already in use by other existing cryptocurrencies.
Despite this apparent anomaly, they have apparently received a quarter of a billion USD worth of crowdfunding! This is a HUGE amount of money for what amounts to being just one of a slew of competing technologies that each have their own pros and cons.
In any case, it appears that there are a couple of industry specialists involved and they are backed by 'money people'.. However, I have seen no evidence of a kind of vision or foresight that I would be looking for in a 1/4 Billion dollar startup! In fact, they are quoted as saying that those who gave them Bitcoins for their ICO are not even investors and are really only 'donating'. What will they even use that money for? I have no idea. I have read that much of their funding came from crypto hedge funds and that they themselves will keep around 8% of the funding - given their background in the financial industry it seems plausible that their contacts simply agreed to use hedge fund investors money in their project in order to take a nice cut of the ICO money, with little thought as to the actual product being created.
Today I learned that the price of TEZOS has dropped 75% due to ongoing arguments within their team and investors losing confidence - plus now there is a possibility of 'lawyers' attempting to open a class action law suit on the premise that TEZOS is an unregistered security.
Was all this planned for some reason? Did someone exploit the tech team and somehow bet against them? Or is this just another example of politics and short sighted enthusiasm catching the zeitgeist of the moment and the greed of people wanting to find the next bitcoin?
If nothing else this is a big lesson in the way that psychology directly effects such technical projects' success as much, if not more, than the actual process of creating the technology. For this reason it is absolutely essential that the harmony and integrity of the team is given the highest priority in such projects - which means transparency, communication and honesty in all ways possible.
If we use such experiences to learn from then every failed project can lead us to greatness anyway!
I have heard that EOS, @dan's new project has received a similar amount of funding and frankly it looks to me like EOS is far more likely to thrive into the future of the web.
Wishing you well,
Ura Soul
Buy My T-Shirts, Gifts & Other Clothing Here.
https://cointelegraph.com/news/tezos-ico-class-action-lawsuit-in-works-as-value-tumbles
I think the reason why Tezos is tanking is simply a realisation by so-called "investors" that this is not an investment.
I believe the CEO, or the company, has always made it clear that the funds were effectively being "donated" in exchange for tokens which are more like an acknowledgement of thanks for the gift.
Now that a dispute has erupted between the company and the "not for profit" Foundation which received the gift, people who failed to read the ICO papers requesting a donation, have suddenly come to realise that they have given their money away and can't expect to get anything back, ever.
Now we mustn't forget that greed played a big role here. Those who may now complain that they thought they were making an investment, didn't care about the fact it said it was NOT investment. They were greedy and were sure they could "flip" the tokens to another investor who was even more foolish than them.
There are many ICOs which are following exactly the same principal. Everything you give them is a "gift", or a "donation", or a "contribution". Many don't call it an investment, because it is not.
In most cases, the tokens don't entitle you to share in profits or success. You won't get dividends. You can't vote. You can't influence the company in any way. You can't attend Annual General Meetings. You probably have little or no interest in using the tokens. The tokens have nothing more than a symbolic value, like the old war medals that you can now buy for two-a-penny.
In simple terms, the success of the company won't affect the price of the tokens unless the token is very much in demand to spend on the company's products or services. Usually the supply is so large that it dwarfs the "use" case, if there ever was one.
I'm sorry to say, but fools and their money are easily parted. Those who fail to read what they are "buying" (i.e. "donating"), or those who can't understand it, learned a lesson.
Nobody forced them or induced them to "buy". The company did not go knocking on people's door saying, "Please give me your money, and you can probably sell the tokens and get rich". Those who "bought" tokens beat a path to the company's door, demanded tokens, in exchange for the promise of nothing.
These people do not need protecting by the regulator. We don't live in a nanny state. If we stop them investing in ICOs, they will still lose their money by betting on a three legged horse, or a fat greyhound.
The foundation which received the money is a "not for profit" foundation. In other words, it should use the funds it received for the benefit of the "public". that does NOT mean for the benefit of the donors, nor for the benefit of the company.
I can imagine the company thought it would different, maybe they thought all the money going into the foundation would be theirs to do with as they please. Now the foundation is not playing ball, I can see why there is a dispute. A quarter of a billion dollars is an awful lot more than the $20 million they dreamed they might raise.
I didn't read all of the whitepaper for Tezos, but I think most people think of an ICO - an initial coin offering, as being the beginning of a launch of a currency that will be traded and have utility at least for use as a trading token. I don't understand why the word 'donation' would be being used when the only function of the entire project appears, from the content on their crowdfunding website, to be the creation of a cryptocurrency - so while it is true that there is no investment in the sense of investing in a company (as with share ownership) there IS an investment in the sense of investing in tokens which will themselves have a value which speculators are thinking will rise after they invest in them.
By using the word 'donation' there is an inference that nothing will be returned in exchange for the bitcoin and ether that was provided to Tezos - but surely that is untrue!? If the project fails and the coin never launches, then yes - 'hard cheese'!
Frankly I think many ICO's are scams, I'm not saying Tezos is one, I hadn't even heard of it before, I don't look into ICO news that much, but I mean how many alt coins can be created a month? I guess eventually most of these coins will flop, I am not an investor (wish I were) but if I were one I would stick to the top 20-30 coins and just invest in the ones I think are the best, ICO's in my opinion are way too risky.
I agree that some are scams and I think that many more are not so much scams but are basically pointless and completely fail to demonstrate an understanding of what a cryptocurrency even is. I support technology that is functional and which is an evolution of what came before - which is why I like steem and probably will like EOS.. The rest are just background noise to me at this point - except the ones that have huge funding since these effect everything else.
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Thanks! :)
@ura-soul Maybe because of Clif High and a possible HIT on his Web Bot report ???
I don't know anything about that - is he involved in TEZOS or did he just make a prediction about it?
I just watched this video ...............
I take it from that then that Cliff runs a webbot that makes predictions and it picked out TEZOS as being a big deal. I don't really give much weight to webbots myself, but it certainly does appear that there is a lot of hype around the technology that might have grabbed a webbot's attention. It seems like the biggest 'feature' of this technology is that it is being created by connected people who have worked in the world of banking/finance as opposed to more technology oriented people who have had to find partners. We shall see.
@ura-soul Yes everything is a RISK, maybe TEZOS is a good buy at even lower prices and maybe not, anybody's guess.
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