Don’t Buy $FARM or FarmTownLife Token: An Investor Lesson In Shit Coins

September 11, 2017

 

I have been in social gaming and social networking product development for over a decade. I am not pounding my chest here. Well… Ok maybe I am. Over the years I have learned a lot working on the back end of a freemium social games. Customers play the games for free, but they can also buy tokens to help them progress more quickly in the game. The tokens they purchase for real money are spent on virtual items that can be collected. They can also purchase power ups that will give them an advantage against their competition. Most of you understand how these social games work. People spend money on entertainment with no expectation of ever being able to get their money back. Understanding how a virtual currency economy and ecosystem works in a micro setting of a social game is what really perked my interests into Bitcoin and other Cryptocurrency. Nevertheless, my joke with friends is that I’m old school and have been in virtual currencies since before they evolved into Bitcoin and Crypto. Joking aside, I see many similarities between the two.

 

Prologue Disclaimer

 

Before I talk about the similarities, I want to spell out the HUGE difference between virtual currencies and Crypto. If we were to ever charge real money for anything in our games, with the expectation of customers being able to cash out or make money, we would be in jail or out of business. The regulations are strict, confusing and not absolute.Things have eased up in the last 4-5 years and some states and countries allow real money gambling on social casino apps and betting apps, but no one can make a living playing Candy Crush or Clash of Clans. Rather than bore you with the intricacies of social gaming and gambling regulations, I am going to use a fictitious analogy to make my point. For any of you nit picky fuckers out there: Don’t read too much into this. It’s NOT about anyone in particular. I made this shit up.

 

 

FarmTownLife Token ICO $FARM

 

The best example I can use to illustrate my point is Farmville meets Crypto. Let’s say a new decentralized social game called FarmTownLife came out last year. They have an ICO and sell $1 billion FarmTownLife Tokens and raise 500 million. I can guarantee you Crypto traders would buy the shit out of FarmTownLife Tokens and probably make money on them pumping and dumping on people. Let’s also say that all of a sudden every middle aged house wife, soccer mom and their kids started getting into FarmTownLife and their DAU skyrockets into the millions. The supply and demand for FarmTownLife Tokens would increases exponentially. FarmTownLife Tokens then get listed on every exchange which then puts everyone in FOMO, and the cost of FarmTownLife Tokens goes to the MOON! $FARM is the new hot shit coin on all the exchanges. We all know what that does.

 

 

FarmTownLife Token Frenzy

 

HOLY CRAP! Who would've thought FarmTownLife Tokens, of all things, would gain traction. People are getting rich and buying cars, houses and the frenzy and FOMO escalates! All of a sudden Little Billy’s Dad has to use the credit card at Walmart to buy his son school supplies. Declined! Declined! Declined again! Dad is pissed off. He calls his bank. “Why the fuck is my card getting declined?” “Sir there is a charge for $20k FarmTownLife Tokens on your card.” “What the HELL! I never bought FarmTownLife Tokens.” “Sir, it says your wife made these charges... We have a credit card authorization, passport, drivers license and blood test on file authorizing the charges.” You are fucked! You are responsible for these purchases and must pay!”

 

Dad is not going to take this injustice lightly. He is in denial that his wife has a serious FarmTownLife Token addiction. He has friends in the SEC, FBI and NRA so he starts banging the pots and pans filing complaint after complaint with anyone who will listen to him. Hours upon hours he spends writing journalists, posting on Twitter and complaint boards, “FarmTownLife and FarmTownLife Tokens are a SCAM!”

 

FarmTownLife Token Explodes

 

Meanwhile, FarmTownLife is cranking! I mean HOCKEY STICK 100x exponential growth. The shills on YouTube, Steemit and Twitter are running with it full court press. The pump and dump crews are trading the shit out of it and making boatloads of money. The people playing FarmTownLife just want their FarmTownLife Tokens to keep building, growing and expanding that farm. This goes on for a good year or two. This scheme hits the next level and evolves so much that now the soccer moms, college kids and savvy gamers have connected the dots on how to grow that farm so big and to bleed their earnings off into the Crypto exchanges to convert into fiat. That’s right REAL money! Articles are starting to pop up, “I make 5k a month tending to my virtual farm in FarmTownLife!.”

 

FarmTownLife Affiliate Links

 

FarmTownLife want’s to grow, so they do what all the other shady Crypto sites do and offer affiliate links, which only flames the fire and FarmTownLife frenzy even more. “Sign up for FarmTownLife under my affiliate link and get 3% off your FarmTownLife Tokens!” Meanwhile, the IRS, SEC, FBI, ATF and every other government agency is having to ban FarmTownLife and FarmTownLife Token trading from their internal networks, because their employees are now wasting company time playing FarmTownLife for beer money.

 

The Bad Seed

 

Johnny Law, the FBI agent who is an over achiever, had it all figured out. He was racking $500 bucks a week shilling FarmTownLife Tokens on YouTube under an alias screen name “CryptoFed.” He is now pissed off because his under the radar side hustle is compromised. He can’t check his burner phone at work or log into bittrex undetected anymore. He is losing money to the other shills making loot and his ego is bruised. He now can’t help himself. One hundred years of cop in his bloodline and the Johnny Law kicks in. Rather than just chill, he decides to burn the whole fucking thing down.

 

 

Fed Party

 

Johnny calls up his other Fed friends and they decide to have a fed party. They all agree this looks like a good way for themselves to get promoted and start an investigation into FarmTownLife. The dots start connecting and thousands of “Little Billy’s Dad” stories start coming out. It doesn’t take long for China, Russia, Korea, Japan and the United States to ban FarmTownLife. Overnight, the FarmTownLife is mandated to pay back everyone who invested in FarmTownLife Tokens. They can’t, so they are forced to go out of business. The market cap was in the multi-billions and now it’s $0. Thousands of people lost ALL of their money. The various governments who banned FarmTownLife Tokens point at it and say this is why Crypto is bad. It is just a total shit show for all parties involved. Then out of the darkness the Candy Clash Token ICO is announced and the cycle repeats. On a side note, during this entire cycle Bitcoin remained strong and continued to hit all time highs.

 

Disclaimer

 

The story I painted is completely fictitious including the photo shopped artwork. (well, besides the part about Bitcoin) and is a dramatic perspective of the state of the Crypto market. There are a few legit projects who have sprung from ICO’s, but many more are smoke and mirror businesses headed for disaster. Farmville is a social game. Had they gone down the ICO route with the FarmTownLife business model, they would never have become the legendary social game beast they became. They pioneered how to make gazillions of dollars off virtual goods, selling fun and entertainment to households around the world. Had it all gone up in smoke like FarmTownLife, The Farmville team would be in some minimum security prison while the inside guy who spilled all the dirty secrets to the Feds would be in Witness Protection in an undisclosed location.

 

 

The Takeaway

 

Will this happen in Crypto? I doubt it. Will people go to jail for doing shady ICO’s and burning good people for money? Most certainly there will be a few sacrificial lambs. Will some companies succeed? Yes. Will many fail and disappear or evolve into another shady company? Yes! This is part of the evolution and regulation of any industry. I watched social gaming and online gambling go through this. As a matter of fact, in 2011 the feds shut down Full Tilt and several other poker sites. This set back real money gambling on mobile social casinos from becoming a reality for many years.

 

The Psychological Switch

 

I see many similarities in the psychology of people spending money on social gaming tokens and Crypto. Watching people spend money on virtual items daily, you learn what drives them. Achievements, sales, new levels and new virtual items are all part of the equation. In a game people purchase these items for fun with no expectation of any ROI. They are driven by friendly competition and sport. The community that surrounds the social game also helps add to this. These are the people who they play with or compete against. This all sounds familiar right? In Crypto there is a slight psychological switch. While many of the personality characteristics are similar, Crypto traders will rarely, if ever, spend money on a virtual token with no ROI. They are either smarter or more evolved in how they view virtual and Cryptocurrencies. Some may have purchased in-app tokens in a game in the past, but why would they spend money on a virtual token when they know they can buy Crypto tokens and potentially make exponential ROI. To be blunt, I see Crypto as one of the most fun new social games that is not a social game. Instead of collecting virtual items or growing farms, people are growing investments and making real money, or at least they think they are. This is what is sticky about Crypto and why so many people get hooked. So what’s the downside?

 

Living on Hope

 

Please do not distort this in any way. I am a huge Bitcoin and Crypto lover. I hate people who preach doom and gloom. I try to speak to people’s common sense, but hope is a very tricky thing. I don’t consider myself an expert in Bitcoin. I have been invested since 2014. Watching the evolution of the various Cryptocurrencies and the hundreds of new ICO’s, I can’t help but to be wary. Not every ICO is shady, but I do question many of the businesses behind these coins or tokens and how they will ever deliver ROI to their investors. I see shit coins and tokens treated just like the virtual tokens in the games I make. Most Crypto traders don’t really care about what shit coin they invest in. They just want to make money. If they are making money they will ride and promote the hell out of a coin. The shit coin then goes up and they make more money. This is where it get’s grey for me. The not so savvy investors often become the pin here. These people are new to Crypto and can’t differentiate the leaves from the trees. They buy into the shills and believe there is some value in a blockchain token that is all smoke and mirrors. They are basically buying hope. They hope their investment will return exponential ROI, and they will be able to buy that summer home or put their kids through college. They have no clue in what they invested in. They just heard a lot of noise on YouTube and Twitter and saw a bunch of pretty graphs and went all in. Little did they know they would have been better off just buying Bitcoin or a hamburger, instead of dabbling into the hot new coin or token of the week.

 

Last Thought

 

Coming from my background it is hard to not have a cynical view like I do. I would love to see all of these blockchain companies be successful, but this is not realistic. One out of ten startups succeed. Success is defined by paying back investors handsomely and not treading water. Treading water means you have a cool company and idea, but it makes no money. These type of businesses always burn cash and end up having to raise more money further diluting investors. Most of the time they don’t do shit other than pay their bills to keep their doors open. The weak ones just shutter and dissolve. Most times you never see cash from these companies. This is the nature of tech start ups. If you think Crypto is any different, you are kidding yourself. My suggestion is to do your research and only invest in projects you clearly understand. Take this one step further and only support companies backed by dev teams with experience delivering results. My best advice for novice investors is to just stick to Bitcoin. Buy it on a dip and forget about it. If you do feel so inclined to venture into various Cryptocurrencies and ICO’s remember you are playing with fire. The truth is many people make lot’s of money trading Crypto and participating in ICO’s. I also hear horror stories of people losing more being a greedy dumb ass speculating. Hopefully, my FarmTownLife Token analogy resonates. Even with that said, every once in awhile you get that unicorn that delivers 1000000000% ROI. Just remember if you get lucky, good for you! If you expect that on all your shit coin investments, you are living on hope. You could be just investing into another version of FarmTownLife Token.

 

Follow On Twitter: @piratebeachbum @coin_strategy

www.coinstrategy.io

 

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