Should you invest in ICOs? Emphatic NO for 99.999%

Now in my 7th week international “Blockchain Tour” of attending conferences and learning from industry players. I am beginning to see some patterns. Bear in mind I am still a neophyte so please just reference and make your own decisions:

1) Yes to tech/innovation: the tech/promise of blockchain there, yes, we hear disrupt this, revolutionize that, yes, yes can happen but less vocal is the tech will also make incremental improvements in just as many if not more areas than disrupt; people are rational, in every bubble, there is basis for it, it just takes time for dust to settle. Right now, in blockchain, it’s like a Gobi sand storm.

2) “Invest in what you can lose”: is the most common answer I hear everywhere and it’s horrible advice. ICOs are risky, only invest what you can afford to lose? What the hell does that mean? If I can afford to lose $1, I still don’t to lose it betting on a dumb investment or outright scam. My advise? If you really want to invest and be the next Crypto-whale, spend the time to learn the space, meet the entrepreneurs (or scammers), look them in eye, so you know. This is not easy, as so many projects, happening so fast, so technical, how can you know what’s real or not? Regardless if the company has raised serious VC cash or ICO bucks, real entrepreneurs still need to develop the tech and product, build teams, service customers, file taxes. As much as libertarians can mantra F*** the government all day long, this is the real world with real money. Execution matters.

As much as blockchain pioneers and entrepreneurs like to preach “decentralization” and “democratization” — the business of blockchain especially in wealth creation is the exact opposite. The pioneers, whales, insiders control and influence the market. Demand and supply are NOT (yet) based on market forces, far from it. Read this: Buyer Beware and how Wall Street is playing us before you invest one cent. I don’t agree 100% with the authors but the market is as stated: it’s crazy now, and open for exploitation. The insiders have a huge edge. Tread carefully.

3) Help is coming: if you insist on put in 0.1% or 5% or even 50% of your savings into blockchain or crypto, then commit time to learn the market yourself. This is a serious commitment, given the vast scope, depth and speed of the space, it’s tough, I’d say impossible to learn it part-time or without a team. Help is on way. Several crypto index funds, ETFs will come soon. Moreover, there are several actively managed crypto funds that are open to retail investors. You may need to pay a management fee and/or performance fee, but if this means these managers can scale up, have professionals diligence and pick the best bets, it can be worth it. It’s a lot easier to pick the right manager out of dozens than to pick thousands of coins.

Diehard libertarians will say, blasphemy. Fund managers are evil, they are the intermediary. Blockchain will eliminate them.

I’m a poker player. I’ll take any BTC bet that 10 years from now, in blockchain, in fintech, in any fast-growing space, the need for smart professional managers will grow, not die.

Care to wager?