What we know as the Technology 4.o Revolution is no longer news to Vietnamese people. However, they still hesitate to discuss investment opportunities related to blockchain and Initial Coin Offering (ICO) projects in light of Vietnam’s ban of payments in Bitcoin and all other altcoins from the beginning of 2018. People in Vietnam have somehow misunderstood the concepts of blockchain, cryptocurrencies and virtual money, and often equate one for another.
Their hesitation results from a series of ICO scams that happened a couple of years ago, when Vietnamese people were still hypnotized by the drastic increase in Bitcoin prices. Out of the top 10 biggest ICO scams in the world, Pincoin and iFan took the lead as they ended up stealing approximately $660 million USD from about 32,000 investors in 2018. It is worth mentioning that both projects were under the control of Modern Tech, a Vietnamese company. This means that among those 32,000 individuals, a majority of them were Vietnamese investors that ended up losing a lot of their money. It somehow explains why the term ‘blockchain’ and ‘cryptocurrency’ have become so sensitive in Vietnam.
As of 2018, according to Satis Group report, 78% of ICOs are scams. ICO scams in Vietnam share one common feature: they apply the MLM/Ponzi model with the nametag of blockchain technology. The Ponzi multilevel model is a form of borrowing from one person to pay debts to others. Borrowers make a commitment to pay high rates to lenders. Subsequently, lenders are attracted by the promised high potential income, then recommend others to join and receive referral commissions. In short, the Ponzi model essentially is the promise of attractive incomes from the “investment amount” (actually lending) that cannot be found in any other investment models.
Nobel Prize – winning economist Paul Krugman mentioned that Bitcoin was indeed a bubble as it followed Ponzi scheme. However, Krugman did not point out who the main beneficiary of this Bitcoin-focused Ponzi model was. In fact, in the case of Bitcoin, there is no single individual responsible for collecting money from investors or paying them interest. Similarities between the two, if any, may perhaps just be the fake hype or owners’ psychological impact to encourage others to buy in more, and as a result, leading to an increase in the coin’s value.
Should I Invest in ICOs?
In fact, there exists plenty of blockchain projects and ICOs that are worth investing in. You might be very surprised to know that there are many successful projects of which core products are developed by Vietnamese teams and companies. One of them is Axie Infinity – one of the oldest crypto-collectible games in the world that encourages people to raise, breed, collect and battle snappy but adorable fantasy creatures named Axies.
Considered as extremely volatile assets, Bitcoin and other cryptocurrencies are, of course, risky and unpredictable. However, as a rule of thumb, high risks are also sometimes associated with high potential returns. The crucial point is to choose the right project and coin to invest in, which is undoubtedly a challenging task. ICO scams commonly have no clear plans on how to issue their tokens to buyers, so if its tokenomics is not clear and concise and if the purpose of creating that coin/token is ambiguous, then you should definitely be careful before making investment decisions. Besides, reading their whitepapers and making appropriate assessments are also recommended. Finally and most importantly, do not be fooled by the huge amount of returns promised.