Cryptocurrency: Success lies in the community, failure also lies in the community

For the crypto community, the past month was a golden time with lots of good news.

When cryptocurrencies become “mainstream” in the investment world

The first official Bitcoin ETF in the US is launched on the NYSE. The Mayor of New York receives his salary in Bitcoin. The world famous Wharton Business School accepts tuition fees in Bitcoin. Commonwealth Bank, one of Australia’s largest banks, provides a crypto investment platform to the country’s 6.5 million users.

For the cryptocurrency community, over a month has been a golden time with a string of good news that followed one another. Mainstream cash flow is strong in many ways. The first Bitcoin ETF in the US is the second largest ETF in the history of the first day at nearly $ 1 billion.

It is a breath of fresh air for asset managers all over the world, even if very conservative pension funds have cryptocurrencies in their portfolios, either directly or indirectly. For example, one of Australia’s largest pension funds, the Queensland Investment Corporation, has made “a small investment” in crypto since mid-October. The move follows several U.S. pension funds and Canada’s second largest pension fund investing in the cryptocurrency sector.

Even those who are still skeptical about cryptocurrencies cannot stay out of the game. Jamie Dimon, CEO and President of JPMorgan Chase Bank, is one such person. On the one hand, the bank offers its customers cryptocurrency trading and storage services. On the flip side, those who follow international financial news also know that Mr. Jamie is skeptical of Bitcoin and often says that it is worthless. He compares it to cigarettes, unprofitable, but “my customers want to own it”.

Also, when the suspect jumped on the train to make money for fear of missing a train, the train went faster. The price of many large cryptocurrencies such as Bitcoin, ETH rose many times, while smaller coins with copper rose hundreds of times. Needless to say, the very small coins, some people joke that there are too many zeros, can’t count. In particular, there are small-cap coins like Shiba Inu, which are 40 million percent (40,000,000%!)

It seems that the stream of good news for cryptocurrencies continues, with breaking news almost every day about a real-world institution accepting cryptocurrencies, investing in cryptocurrencies, or other applications.

If you combine cryptocurrency with a closely related world, NFT (Non-fungible token), it can be said that since June a cyber economy has exploded with the operation of cryptocurrencies, NFT-Gaming (NFT-Gaming) and other NFT- Products (recently Nike followed in the footsteps of other popular fashion brands to “crypt” the Nike brand at prices above God).

There is an organic connection between startups in the field of “crypto”, from gaming to the concept of the metaverse, which the Facebook boss (who changed the company name to Meta) is actively promoting. The owners of these startups received tens of millions of dollars in investment, then brought in some of the money to “stick” into decentralized financial platforms (DeFi) and cryptocurrencies, and then put it there. Attract talented talents who are passionate about this world to join.

Many successful people from the securities and real estate sector in Vietnam who were previously indifferent to cryptocurrencies jumped into this field. From June to date I have had to be a reluctant guide to more than 10 people with years of experience in securities, real estate, even senior positions in some companies, to learn more about this world and many of them have spent billions of dong “trying it out” “.

Mutual funds operating in the field of “plowing the NFT game”, investing in cryptocurrencies, DeFi … opened by young people with experience in finance have attracted a lot of large investments. There are organizations that have only been in existence for a few months but have passed the milestone of several thousand members and attracted nearly a million dollars in investment.

Everything “hot” is a scam

Everything seems to be going well for crypto investors?

Not completely. The story of the Squid Game coin, dubbed “Bump Hui” in the industry, the digital currency goes to 0 in a split second, is a warning. And unfortunately, many people who lose money have “baked” their savings. CNBC reports that someone in Shanghai, China has invested all of their savings worth $ 28,000.

Take advantage of the massive rise in Shiba Inu prices and the propaganda of the concept of self-governing and decentralized organizations (DAOs) promoted by some global consulting firms and some academics, a new business model, a project called AnubisDAO was born. With the image of Shiba Inu and the DAO concept, 60 million US dollars were defrauded in this project to people who have invested money in the project.

Industry insiders call this a “rug pull”, which means that some project founders entice participants to put money into a certain decentralized financial project, which promises security, and one fine day their money is automatically gone.

It is worth noting that there are many people who have lost all of their savings on this game, like the person in Shanghai above who lost all of their savings on the Squid Game Coin Game.

An investor, Brian Nguyen, told CNBC that he had lost his nearly $ 470,000 investment in AnubisDAO. Interestingly, he thinks that in the cryptocurrency world, investors often choose to “buy first, research later”. This is definitely not the way many crypto investors I know, but there is no denying that some in this community do.

Join crypto communities, check out coins that are supposed to “float” and buy them before investigating the project. In the case of AnubisDAO, the scammer didn’t even bother to open a website, just relied on social networking tools like Discord and Twitter.

Success lies in the community, failure also lies in the community

In 2019 I had the opportunity to read a study by Siddharth Bhambhwani of the Hong Kong University of Science and Technology (HKUST) and colleagues on the factors that influence “degradable” cryptocurrencies. This empirical study shows that it is about computing power and “network” – measured by the number of people involved in the project (possibly owning, participating in “mining”, discussing on the Internet). Social networking communities).

This is one of the first well-researched studies I read that most closely mentions the concept of the “coin-playing” world from 10 years ago. The trust and growth of a community of people who accept, use, and promote determine the success or failure of a cryptocurrency.

And this community formula for success is being used more methodically than ever in new crypto projects. Opening a Discord, Telegram account to advertise the project, promote it on Twitter, Facebook is the centerpiece that the NFT crypto project is all doing. It’s even more important than investing in the core technology behind it.

On a few occasions when we were evaluating some crypto projects or NFT games that were raising funds, a few friends and I smiled when we said some founders that they will mainly use their money to “create community”. “floating” their project will attract more money instead of focusing on investing in the “cooking” segment behind the technology platform and business model. We don’t invest in projects like this because they don’t meet the team’s criteria, but we know a number of crypto venture capital funds that specialize in investing in projects that have a certain approach. like that.

And it’s not hard to see that one of the most popular, attractive salary promises job vacancies in the cryptocurrency community published in the community are those related to community building and maintenance. .

In a way, the crypto investing world seems to have a formula for creating projects based on something that sounds good, a concept that shows up but is fuzzy enough that a lot of people don’t understand (what my friend called the ” Confusion factor ”). , for example the surreal Metaverse world, blockchain games, NFT linked digitized content … and then create a community, do several rounds of token sales of the project and so on and so on, sometimes also create a side project.

A recipe to make stars, build a fan base and hope it works. What’s worse is that the project’s creators intended from the start to deceive others. In a way, the crypto world is a showbiz world of communities of people who grew up using social media, video games, and these multiple generations, which I probably am in my lifetime. The next generation of newcomers are leading the game with a way …