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Celebrity-endorsed ICOs are a dumpster fire of epic proportions Story by Bryan Clark In an initial coin offering (ICO) there are two likely outcomes: profit handsomely or get taken for a ride. Rarely does the volatile nature of the investment offer any middle ground. And if it’s an ICO you first heard about on social media from a celebrity endorsement, you can be all but sure it’s the latter. Still, the lure of overnight profits often overrides judgement, leaving otherwise risk-adverse investors (or wannabe investors) willing to take a leap of faith in otherwise proven technologies.
First, what is an ICO?
Simply put, it’s a round of fund-raising similar to an initial public offering (IPO), only the shares don’t have a vote, investors can’t buy a majority stake, and there’s no underlying assets backing the investment. Investors inject capital into a project they believe in — or on they believe might make them rich — and are handed worthless tokens in exchange.
The hope is that the tokens appreciate in value and that the investor can recoup his initial investment and a tidy profit.
And sometimes they do.
Ethereum , for example, first launched in 2013. It held an ICO a year later where it sold 11.9 million ether — its digital currency — tokens for about 31 cents each. If you’d have invested $1,000 in 2014 and sold in mid-January 2018, you’d have pulled in more than $4.
5 million — a staggering 450,000 percent return.
It’s success stories like these that we’re familiar with. Newly-minted millionaires leaving the grind to form their own crypto utopia in Puerto Rico; the 12-year-old who invested $1,000 an became a multi-millionaire by his 19th birthday; or the guy who turned $3,000 into over $25 million in Bitcoin profits and now travels the world in the most luxurious way imaginable.
But for every boom, a bust lingers on the horizon. It’s a truth few are willing to face in the cryptocurrency world, a world where unfavorable news is often dismissed with conspiracy theories about “whales” and “FUD.” In this world, success is rewarded in the form of “Lambos” and New York Times features. Failures are tucked away in a corner where we can forget that it isn’t just money on the line, but often human life .
Bring on the celebrities Celebrities aren’t immune from the excitement.
In recent years, numerous notables have been lured into the fray. Actors, athletes, and public figures have been promised lucrative deals that trade a recognizable name for social proof that some of the shadiest cryptocurrency projects in existence are, in fact, legitimate. We’ve seen the likes of DJ Khaled, Floyd Mayweather, Paris Hilton and even washed-up has-beens like Steven Seagal shout to anyone willing to listen about the investment power of upcoming ICOS… for a price.
And that’s where it gets a little hazy, at least for me.
In our daily lives, these aren’t the names that lend themselves to credibility in the investment space.
They aren’t Warren Buffet. Hell, they’re not even Jim Cramer. These are celebrities, two of which are paid for either punching or pretending to punch other people in the face.
Mayweather, it’s worth noting, may not even be able to read . (.
