Ethereum creator Vitalik Buterin recently expressed frustration on the extreme focus on making a quick profit from an ICO instead of helping to improve a system that is still easily bogged down by Cryptokitties and EtherDelta. To be fair, scaling is still a problem for most blockchains and all the sniping over social media doesn’t help. While Buterin did acknowledge that he wasn’t likely to leave purely due to “stupid jokes,” all the community infighting over the direction that cryptocurrencies should take could drive Buterin away from his own creation if real progress wasn’t being made.
Virtual Signaling Annoys Me. Creating Value for Users Doesn’t.
Much of the problem is that people get too hyperfocused on quick profits and not enough on creating a product that generates value for its target audience. It’s tempting to issue the ICO before the entrepreneur actually has at least a prototype ready but that doesn’t necessarily mean he or she should. As a couple of cases have shown, the SEC is very likely to come knocking at the door if the entrepreneur is not very careful. This doesn’t necessarily mean that the entrepreneur has a bad idea. It just means that it’s a good idea to at least have an alpha version ready and make sure that all the regulatory paper work is filled out and turned in before issuing the ICO.
Here, I have to admit that I rolled my eyes when I ran across an article on Coindesk titled, “Blockchain’s 2018 Goal? Human Rights Over Financial Gains.” Great; the virtual signalers who demonize all the people who got rich by being early Bitcoin adopters have infiltrated a popular cryptocurrency news site. The article does make some valid points, though.
What can the target audience do with a blockchain-based platform that it can’t do with the two or three mainstream platforms that might already exist? When I suggested in an article for FEE that the homeless could be part of Blocklancer’s target audience, Blocklancer seemed to like the idea that its freelancing platform could be useful to the less fortunate. Its platform is designed so that its audience doesn’t necessarily need a bank account, photo ID card, or permanent address in order to use it. Part of its marketing budget could include outreach to these people. That’s something Upwork can’t do because it’s tied to Paypal and, through Paypal, the banking system and all the regulations that the financial sector has to put up with. When you can define your target audience, not only can you work that into your product design, but you can also create a more cost-effective marketing plan.
Human rights and financial gains need not be mutually exclusive concepts if we bend a point enough to plan beyond the next quarterly report. If you can make a profit and add value to people’s lives at the same time, then you’re doing something right and your quarterly reports can become proof that your product can reach markets that your supposed competitors can’t or won’t touch. It might mean telling the virtue signalers to shove off and go volunteer at a homeless shelter, but that can be a very satisfactory feeling when you are more inclined to focus on how this snazzy new technology called distributed ledgers can give the less fortunate more leverage for lifting themselves out of poverty.
Smart Investment Strategies Come First. Then Invest Based on Values.
To be fair, many ICOs can and will fall flat. Some will fail to launch their product or fall behind on milestones even though the developer team did not intend to commit fraud. Others will have never intended to actually develop their product in the first place. Investors will inevitably lose money if they put wishful thinking ahead of due diligence.
This does not mean that investing based on values is necessarily a bad thing. I favor tools that the less fortunate can use to pull themselves out of poverty. I also like the idea of using blockchain supply chain apps to combat the counterfeiting problem. However, that doesn’t mean that I won’t poke around and see what I can find out about an ICO and check ICOBazaar ratings before I decide where to put my Ethereum. It will do nobody any good if social investors get burned because they didn’t do their homework. So regardless of whether you want to make a profit or put your money behind a project that can solve social injustice, you will do yourself and everybody else a favor by making sure you don’t get distracted by the shiny thing.
Above all, I don’t bash investors and development teams for wanting to make a return on investment. I’m okay with volunteering if it’s what a dev team freely chooses to do, but there is a word for forcing people to provide something of value for free and it’s not a pretty one. The silver lining here, though, is that the return on investment could be seen as a measure of an innovative blockchain app’s ability to provide value for its users that legacy systems can’t. Purely focusing on profits might be a good way to make nice guys like Vitalik Buterin consider leaving the cryptocurrency and blockchain niche altogether, but that does not mean that social good and value creation need to be mutually exclusive ideas.