Initial Coin Offerings (ICOs) have received a bad rap recently with the influx of ponzi scheme-esque, cash grabbing scams that have been flooding the market. Vector, a cryptocurrency exchange with a focus on ease of use, accessibility, and customer support, is trying to change that.
When it comes to decentralization, one of the biggest benefits of a blockchain is also one of its biggest weaknesses. We don’t know who to trust. Sure, you can follow the crowd, but with the fast moving, Wild West mentality that overwhelms the crypto space, there aren’t any points for coming in second. This mentality promotes spending money first and asking questions (or doing any research) later as investors try to get their hands on the next coin that’s destined for 100x gains. With this feeding frenzy right below their feet, it gives companies offering new coins incentive to promote their own coins with nothing but hype and a noticeable lack of technical and fundamental details, because they know that people will invest regardless.
While due diligence is a major factor in investing, it’s especially important when it comes to investing in ICOs. The challenge presents itself when any research that a potential investor does is heavily manipulated by the promoter of the coin. Additionally, with most of the information on cryptocurrencies being funneled through platforms like reddit, YouTube, and Twitter, it’s easy for ICO promoters and other paid shills to get the word out and make it seem increasingly legitimate. With the frenzied attitude, the promise of quick money, and some “big names” to back up these ideas, it certainly makes it difficult for the average investor to make the difficult decision of whether or not to invest. It all leads to a couple of outcomes: Dishonest ICOs receive more funding than they deserve, and honest ICOs are filed away as scams, not receiving the funding they need to promote a product that could have real world viability one day.
Vector is trying to change that mentality by promoting its ICO on reddit and trying to inspire backers to do their due diligence. Naturally, it’s a much needed change since the more investors who are exposed to a completely open and honest promotion of an ICO, the more it will inspire critical thinking, as opposed to flying by the seat of their pants when it comes to investing in the next one. Here’s the kicker though, Vector isn’t trying to promote a monetary investment, the purpose of their coin is to distribute and decentralize governance and control of their exchange. So, before you go dumping all of your available funds into it, realize that you’re probably not going to make a great return on investment, another reason to do your due diligence before investing in anything.
A new era of ICO promotion is beginning, there will always be scams, there will always be offers that seem too good to be true, and are, there will always be people trying to separate the masses from their hard earned money. However, when more and more companies come out as honest and transparent, it will be easier to separate the honest from the dishonest and, ideally, will validate the great experiment that is decentralization, making the world a little less controlled by the few, and more controlled by the many.