The ICO Phenomenon And The Marshmallow Test
Let's start by having a look at the video above, which features one of my favorite popular scientists figures, Michio Kaku. Take your time, it's just 4 minutes long.
Finished watching it? Great.
Now, lets focus on that part about the marshmallow test. I will briefly jot down some ideas about it, for those who lied about seeing the whole movie:
- in an experiment, kids were given one marshmallow, and the promise of getting a second one, if they wait a certain amount of time, and not eat the first one
- eating the first marshmallow without waiting for the second one is called instant gratification
- kids who didn't give in to instant gratification (i.e. waited for the second marshmallow) were tracked down for years and proved to be way more successful in life (in general terms) than the ones who just gave in to it
Now, what's the link between this experiment and ICOs?
Well, an ICO is just a virtual marshmallow. You get a part of a business, in the form of a token, and that token has a certain value now. You're free to use it - hence the (in)famous post-ICO dumps that we see all over the place - or you can refrain from using it, waiting for it to go higher.
In the vast majority of cases, most people are dumping post-ICO. They just eat their first marshmallow.
This instant gratification behavior has at least three consequences:
- the token goes sometimes 95% below the ICO price.
- the long time holders are jeopardized by this price increase (their long time investment just got longer than they expected, because some impatient kids were eating their marshmallow).
- the short term holders (the dumpers) are losing faith because they are getting lower and lower ROIs on their dumps, and this snowballs down in an vicious circle, where they are always on the lookout for the next ICO, which will be dumped harder, and so on and so forth.
And, as a bonus, the bystanders (including people not investing, naysayers, regulators) are getting more and more reluctant to the entire phenomenon.
Fact is, there's nothing wrong with the ICO tokens, as there is nothing wrong with the marshmallows. They are just objects, sitting out there. What's really wrong, is the instant gratification urge, which makes the whole phenomenon look bad.
As with the marshmallow test, the kids who are keeping their cool - or, in crypto lingo, are hodling - will see the biggest returns on their investments.
I'm not saying this is easy.
I'm just saying this works better than just eating your marshmallow now.
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.
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Well, exactly this though experiment is what can potentially convince me about that ICOs are cancer.
If I really want to invest and support (and I'm sure the two must go together), I can buy 100000 coins on the dumped price, instead of buying 100 on the initial price.
Of course, usefulness isn't determined by the amount on its own, but if price goes up (which does, for good projects), I better own 100 000 coins instead of 100.
Regards @dragosroua
In my humble artistic opinion, the main factor " patience" will always be the supreme key to achievements in Life ... in every aspect.
Thanks for sharing this awesome video and explanation of it. Regards and have a Blessed Day along your Family
PS: Intr-o alta ordine de idei :-) se pare ca cei de la steempress nu mai raspund sa ma ajute in rezolvarea problemei legate de incetarea postarii blog-ului via website-ul meu catre steemit. Dupa primul blog postat, care culmea a functionat, acum nu mai pot planifica postarea, nu mai se posteaza blog-ul pe steemit dupa crearea lui si nu stiu ce sa mai fac deoarece conexinuea si numele sunt bune deoarece se vede clar ca prin traficul de pe site-ul meu se genereaza sbd/sp pe steemit...sa fie o chestiune temporara? Am sa mai incerc sa contactez pe howo sau fredrikaa ... desi am contacta si un moderator de-al lor ... inca nimic. O zi faina @dragosroua
Imi pare rau sa aud asta, sper sa rezolvi cat mai repede!
In the case of ICO's I completely agree. But if we compare other ways of acumulating crypto wealth like increasing your STEEM. It is more the work of going through elementary school, middle, high and college (posting, interacting, commenting, voting and persisting on doing so) to keep adding value to your knowledge (Steem wallet) and eventually get a good gratification in the future.
the instant gratification problem is way worse in modern society than just ICOs :)
Society and especially sales and marketing have fed that instant gratification need until so many people just want instant results.
Clearly that's not how real things, real progress, real products, real change is made. It's concerning that the crypto revolution has such a large component acting this way, it could de-rail the whole thing.
I'll eat my marshmallow tomorrow thanks.
First off, he's one of my favorites, too so I watched the whole thing to the meaning of life before I even read on. I'm a natural born hodler. :)
Second, I've never much liked marshmallows except in hot chocolate, so that skewers my look at how I will react with a marshmallow, and it always has. Make it jelly beans and it's an entirely different game.
The point being that I don't see things the same way you do, no matter how hard I try. In our case it seems remarkably similar but still...
I'm no wizard and certainly my investment strategy in crypto and fiat has been pretty dismal. In fact very dismal would be correct. So I have to come up with a different strategy on ICO than you do to achieve results that I am satisfied with.
My tendency on any ICO (there have been a couple of exceptions) is to lay back. I am not bright enough to sort through the bullshit of initial claims and take every whitepaper with a grain of salt. I'll wait a little and see how the community around the coin reacts during the inevitable dump. Then I'll decide if it's worthy of my 2 mites,
It never, ever puts me right at the top of the earnings charts. It rarely lets me buy on the initial rise,
The end tends to be the same or nearly so, but the reasoning for it isn't.
Thanks for a simply great article. I really do appreciate it.
I went on a few ICOs so far, and on all of them I had at least 1 year in mind for whatever return would have been possible. With that being said, the initial "bonus / discount / whatever" that you get in an ICO is wiped out on the first dump and for a few good months the price stays below the ICO. But after the first results, the price is slowly starting to rise.
Would it be better to wait for the dump and buy there? Well, I don't know.
I'd rather stay with the project from the beginning because that gives me a better understanding of the team, the dynamics of the product and so on.
Going in when there's blood on the streets would be too "speculative" for me. I use this when I'm trading (or I try to, to be honest) but when participating in a tokenized business form day zero I try to have a slightly more "agglutinating" approach.
I don't know if that makes sense at all, lol :)
I get it, I really do. And frankly, the communities I am most involved with I have been with from the start.
My problem is being able to separate the enthusiasm (or outright fraud) from the facts of the coin. That is the reason for my waiting in some instances.
I think maybe we are saying the same thing with jellybeans and marshmallows. I'd gladly trade a marshmallow today for eleven jellybeans tomorrow. :)
You barely write long post, but when you do, it is a bomb. Thanks for this insight.
What an amazing man he is!
I just fucking love with this marshmallow test, I'm surely going to try it on kids, Holding steem for a long time, lets see where it takes me :)
He is smart guy
That's a fun as well as an accurate analogy.
Thanks for writing it for some of us lazy bums