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- Blockchain projects are about 100x returns not 5 percent per year returns. Obsessing over a precise valuation is wasted energy because if the project does well in the distant future, you’ll profit regardless of whether you moderately overpaid or underpaid at the start.
- It’s impossible to rationally value a cryptocurrency. Look at how the smartest financial minds in the world value one bitcoin: expert A says $1,000 and expert B says $1,000,000. Now do the same with a derivative of bitcoin with no track record and a vague whitepaper. Investors should focus on the big picture, not whether they’ll own 0.0001 percent or 0.0003 percent of the supply.
- If a project raises more money than you anticipate, you get less ownership, but the project has more resources and media attention to execute on its vision. It balances out, and as the saying goes, it’s better to own a slice of a watermelon than all of a grape.
- Everyone pays the same price. Most token sales tout sliding-scale discounts and flash sales (“Day 1: 20 percent off. Day 2: 18 percent off. Hey, it’s power hour! Everyone gets 30 percent off!”). This creates a frenzy and incentivizes bad behavior like pump-and-dump schemes.
- Team members and advisers receive their token disbursements over a two-year period. That signals a long-term commitment to the project and prevents insiders from dumping their supply and disappearing soon after the token sale.