Let’s also talk about cryptocurrency crowdfunding

Crowdfunding, also known as public fundraising or crowdfunding, is translated as "mass fundraising" in Hong Kong and "mass fundraising" in Taiwan. It consists of initiators, follow-up investors, and platforms. It has the characteristics of low threshold, diversity, reliance on the power of the masses, and emphasis on creativity. Crowdfunding was originally a means for struggling artists to raise funds for their creations, and has now evolved into a channel for start-ups and individuals to obtain funds for their projects.

——————Excerpt from Sogou Encyclopedia

Crowdfunding is actually everyone pooling money to get things done .

Of course, in the context of our great China, crowdfunding was not very open in those days, and was directly labeled as "illegal fundraising", which was really a disaster. However, there are countermeasures to every policy. In order to circulate funds, "bihui" was popular in Jiangsu and Zhejiang at that time. It was a group of people who formed a group and then collectively contributed money. The money in the bihui could be used by any one of them when they needed it. After it was used up, some interest would be put back into the pool of the "bihui".

So, in fact, crowdfunding is not very new.

However, in today's era of advanced Internet, crowdfunding has been dubbed as Internet finance and has begun to resurface. In the past two years, it has been at the center of controversy, often making big moves that "shocking the world."

In fact, the surging influx of P2P and crowdfunding funds in Internet finance in the past two years has indeed made many people successful, but people's hearts are no longer the same as before, and more people have been harmed. News of people running away with money is endless, which is shocking to those who hear about it.

This is the case in the fiat currency world, and it is even more bizarre in the cryptocurrency world. The cryptocurrency world is not big, but the number of people is not small, and they are basically a small minority among the crowd, but it is still a circle after all. As a result, there are not many people who make money, but there are many weird birds. Various ways of making money have been quickly copied, including crowdfunding, which has flourished like a spark that has set the prairie on fire. The general model is as follows:

I have a good project. I have everything except money. But the RMB is not good and is subject to various restrictions. So let's use Bitcoin crowdfunding! This way, it will be convenient for everyone. You can invest in me and then sign your name on the sending address. This way, it will be OK for the account! If this project increases tenfold in the future, then you are the investor and we will double the popularity and so on.

Among such crowdfunding projects, the most famous one is the equity crowdfunding of Kaomao. In mid-to-late 2012, it began to collect bitcoins as research and development funds for mining machines, and used bitcoins as equity dividend notes, successfully raising 2万枚比特币, providing sufficient funds for the initial development of mining machines. At that time, Kaomao mining machines were only sold in spot goods after they were produced, and money rolled in at once, like oil boiling over a raging fire. The original stock price increased from 0.1B to 5~7B at its highest, nearly 50-70 times, making many people in the currency circle exclaim "Oh my God", but in the end it could not withstand the continuous cashing out of early investors and the chaos of the issuance system, resulting in over-issuance of stocks, and the stock price fell back below the original stock price or even broke, leaving countless investors penniless and causing the tragedy of countless wealth evaporating. But this was not the end. The end was that after the reorganization in 2014, FC launched a new mining machine and tried to revive itself. However, after selling thousands of mining machines, FC disappeared inexplicably, which eventually led to the complete break of the company's capital chain. The development of new mining machines was interrupted again, and finally FC collapsed completely. The stock price also went from lingering on to completely ashes...

The next form of crowdfunding is rather peculiar, that is, the crowdfunding of PTS (original stock). As the secondary token launched by 3I, PTS has always been known for its ability to make empty promises. In the early stage, it also soared along with the surge in Bitcoin, from only a few cents of mining electricity fee at the beginning to nearly two hundred at the high point. After several cashing out by the dealers (it is said that 3I had hoarded a lot of PTS in the early stage of its issuance), it gradually fell. 3I felt that the profit was insufficient, and began to call for the use of PTS for BTS exchange activities. On the basis of the original PTS of about 1 to 1.2, Bitcoin can also be used to invest in AGS, that is, send Bitcoin to a certain address, and then the system will convert Bitcoin into AGS after accounting, and then cash it out for "future BTS". I can't remember exactly how many Bitcoins people invested in AGS, but it is certain that a large amount of investment was sucked away. Then it was announced that BTS would increase its offering from 4 million to 2 billion. In the period when BTS was first issued, BTS soared for a while, reaching about 30 cents at the craziest time, and then plummeted. The current price is 2.6 cents... The big bear who likes Bitcoin once invested 60,000 yuan in PTS. In the end, even with the increase in BTS holdings, he only lost 2,000 yuan...

Finally, let's talk about Ethereum, which claims to support the next generation of cryptographic ledgers and intends to support many advanced features, including user-issued currency, smart contracts, decentralized transactions, and what they "think" is the first fully decentralized autonomous organization (DAOs) or decentralized autonomous company (DACs) application. Planning began in early 2014 and continued until July 2014, when the crowdfunding plan was finally launched. The crowdfunding time was not very long, but in just nearly a month, 31529枚比特币were recharged in the public account, which was nearly 100 million yuan according to the market price at the time. After the crowdfunding, it was announced that "various new research and development" had been carried out. Its internal trading token ETH was also sold on major platforms. The trend was also first soaring and then plummeting, and then entering a slow decline mode... But what's interesting is that the Ethereum team has been shouting that they are short of money, saying that the funds are not enough to support subsequent projects, and they may have to continue to carry out new financing plans. In September this year, Buterin mentioned in his blog that the current fund holdings of the project are about 2.52 million US dollars. Among them were 200,000 Swiss francs, 1,800 BTC and 2.7 million ETH. At that time, the price of ether was about $0.7 per coin. Their Ethereum team spent $420,000 per month, nearly 1,800 bitcoins. They were criticized by their peers in the cryptocurrency circle as "selling their father's land without feeling any pain."

Three examples of cryptocurrency crowdfunding were cited. They all raised huge amounts and caused a huge response in the circle. However, no projects were found that could be long-term investments and enable investors to earn returns over a longer period of time. Instead, crowdfunding participants who hoarded their funds suffered huge losses.

There are also various forms of sporadic Bitcoin crowdfunding in China, such as Smart Square Crowdfunding (copied the Ethereum model, and was eventually controlled by Shark Coin dealers), Longkuang Bitcoin Crowdfunding (wanted to copy Kaomao, but ultimately failed), Bifuwang Crowdfunding (a big data website research initiated by Pan Guoli, which successfully raised 300,000 RMB), Xiaoyi Crowdfunding (in progress, claiming to raise 2,100 Bitcoins) and other crowdfundings that cannot be named.

In addition to the nominal crowdfunding, there are other forms of derivative crowdfunding. The most typical examples are JuA Financial Management, Hao Bitcoin Wallet, and Ant's Computing Nest. Although they are not named "crowdfunding", they actually collect bitcoins from the public to purchase mining machines, and then send the mined bitcoins to investors.

Finally, there is the unique "cryptocurrency fiat currency crowdfunding" launched by Martian, which has raised millions of funds in China, laying a solid foundation for the company's early operations. Its stocks have recently been approved by the Australian Securities and Futures Commission and will be listed in November.

These projects are dazzling, and have really made many people in the cryptocurrency circle scratch their heads, and have caused countless verbal battles. Whenever a project comes out, there will be people who praise it and people who criticize it.

So what attitude should we take towards these crowdfunding projects? I never judge a problem by one stick, and the same is true for crowdfunding. Below I will briefly talk about my views on crowdfunding in the cryptocurrency circle.

I can say without hesitation that most of the crowdfunding in the form of Bitcoin collection is basically for the purpose of defrauding money. Because it is not legal, because it is not legal, because it is not legal. (I say it three times because it is important)

In particular, the crowdfunding of binary tokens is a leader among them. If the initiators of these binary token projects argue that they are developing new software to solve certain problems in the future, it can almost be concluded that they are scammers.

First of all, how to solve some problems in the future is not something that can be thought of by current thinking. Uber and Didi have eased traffic congestion, but this idea was never thought of a few years ago. Instead, it has developed explosively and then been continuously improved. They will list various examples, saying that their system can solve this and that in the future, which is basically nonsense. It is similar to the idea of ​​"if the handset cord of your home phone is not long enough, then add N meters of wire to your home phone", which does not take into account the emergence of mobile phones in the future. Therefore, it seems that the examples they cited "seem to make some sense", but they are basically bullshit and stinky.

Secondly, any software development project needs templates and codes. Those who refuse to release codes are 100% scammers; those who are willing to release codes are also likely to cheat money, because it is a "dragon-slaying skill" that asks you to find a dragon. This kind of mismatch makes it impossible to verify. For example, "the number of transactions that can be processed in a short time" is a typical example. The cost of the experiment is very high and it is not worth it.

Finally, there is no public account information, such as where the money will be and who keeps it, which is vague. It is 100% certain that he is a scammer. If personal identity information is disclosed, there is also a high probability that he is a scammer, because the Bitcoin fundraising has no legal compensation. Even if he uses it at will, there is no legal restriction. Even if he is sued, there is no way to deal with it. Therefore, he blatantly discloses information unless investors can use underworld means to "deal with" him.

Crowdfunding for mining machine development is also a disaster area . The stock of Baked Cat is a lesson learned from the past, but the era of crowdfunding for Baked Cat mining machines is a thing of the past. At present, the standard chip of Bitcoin is very mature, so it is not very difficult to upgrade. The difficulty lies in the fact that a large amount of funds need to be used for wafer tape-out, so we want to use crowdfunding to disperse funds. However, as a product with an uncertain market size, mining machines should be treated with caution. As long as the tape-out does not fail, mining machines still have certain market prospects and use value. But the problem is...what if the tape-out fails? If no solution is proposed, then the crowdfunding is not credible. If the project initiator shows off his wealth, such as "everyone in the circle knows how many houses and cars I have", then he can be guided on how to get a bank loan.

Crowdfunding mining projects can be carefully selected . Compared with other projects, crowdfunding mining is the most credible crowdfunding because its profit direction is very clear, the computing power that can be deployed can also be publicized through the entire network, the number of machines owned can also be confirmed through self-inspection, and the electricity fee standard can also be made public. You can choose as appropriate. Of course, crowdfunding mining faces the risk of a surge in computing power. Although the current base of Bitcoin computing power is already very large, the possibility of a jump in computing power cannot be ruled out. So it is not 100% profitable. At the same time, crowdfunding investors must ensure that the project initiator is a reliable person, otherwise there is also a risk of collecting coins and running away.

The mining done by Martians is crowdfunded with legal currency. As long as the debt relationship is signed, the legal currency is protected by law, and it is only natural to repay the debt. In addition, the preparations for the listing of Martians’ stocks are running well, and the process is also monitored by the Australian Securities and Futures Commission. There are no problems in the legal aspect. As long as the company runs well, the stock investment will rise and fall under normal legal channels.

Finally, there is miscellaneous crowdfunding . Take Bifu.com as an example. It makes profits by charging for watching coin speculation data and distributes corresponding dividends. This kind of crowdfunding has a clear profit direction. As long as the person who initiates the project is reliable and attracts a certain number of paying users, it should be able to generate a certain amount of turnover. However, whether it can exceed the investment amount to generate profits can only be verified by time. As for some gambling dice website crowdfunding, the profit direction is also very clear. As long as it can attract popularity, it will also generate turnover. Similarly, whether it can exceed the investment amount to generate profits also depends on the operating time. At the same time, gambling websites and other illegal projects are at risk of being banned.

It is not that you cannot invest in crowdfunding projects in the cryptocurrency circle. But you must be cautious. In summary, crowdfunding mining and financial management risks are relatively minimal, followed by miscellaneous crowdfunding with clear profit directions. Second-tier token or system crowdfunding is basically throwing money into the water, which should be strongly opposed (of course, if you think you can run fast, there is no way, after all, new second-tier tokens can still be hyped when they are listed).

Despite all the analysis, I still have to point out again and again: because there are no legal constraints in the cryptocurrency circle, any project has a huge risk of being "suddenly stopped" or "suddenly running away", and the risk level is far greater than that of investment through conventional channels. And once a problem occurs, how to define compensation is a legal vacuum.

The risks of Bitcoin are already enormous. Using Bitcoin for crowdfunding activities, where the projects are related to virtual currency, is actually multiplying danger on top of danger.

Please think twice before you act.

Author: ☆☆EVA☆☆ (Lonely Stranger)
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