The importance of recognizing the transformation of altcoins

Baozou Comment : Blockchain and investment experts have analyzed the investment potential of the blockchain field and believe that there is no need for a large amount of investment funds at present, because the supply and demand relationship in the market is not enough to support a mature large market. The current potential capital market is very small and does not have the necessary liquidity and vitality. Moreover, so far, many token pre-sales and crowdfunding projects have exposed the defects of the market. Therefore, in the face of the continuous emergence of ICO activities, investors need to be rational, especially those without any experience should consider carefully.

Translation: Annie_Xu

Union Square Ventures, Coinbase, and blockchain expert William Mougayar are leading the charge for the appcoin model for software design, but few are thinking carefully about the meaning of these tokens and their impact on product development projects.

People were all busy developing new software models, completely ignoring the lessons learned from past failures, and reasonable checks were also thrown out of the window.

Fortunately, there are similar development models that implement these initiatives, and at least their results prove that the efforts of ICO (initial coin offering) backers may be slim.

New Process

First, let's look at the Stone Age of software development. In the 1970s and 1980s, project management philosophies were mostly derived from electrical engineering and construction management techniques. At that time, projects were planned by committees of developers and project managers who had little to do with the software user community.

The project design goals were written into a design document, which became the blueprint for the code. And this process got its own special name, the "waterfall" development method; it is still used in some industries, mainly in government procurement activities.

However, software is very different from construction, and any errors in its methodology will be immediately exposed.

Software is different from most engineering in that it has an evolving structure. Unlike a car engine or architecture that is built once and then fixed, software is never used again.

Project design without any user feedback usually reflects a lack of consideration for the user experience. In the waterfall methodology, there is almost no compromise in upgrading the initial software version code. Once the software is released to users, it usually results in a buggy product that cannot provide high-quality performance and user interface; once users start using the code, security issues will become prominent.

Over time, these parameters have become the most important part of the modern development process, and the main goals of building software platforms are iteration and responsiveness.

Then quickly into the 90s, web-based platforms enabled rapid technology deployment, and agile and biased methodologies emerged, minimizing “Big Design Up Front” and emphasizing rapid and continuous iteration of code, leading to better quality and success.

The development methodology is simpler, and a "minimum viable product" can be developed with the least features. The speed of product launch is increased, and user feedback is more convenient. With user data, iteration can maximize the connection with user needs.

This methodology is now a common mechanism for software development. Countless successful startups have proven that the "start and continuous iteration" approach is far better than the "start to finish" approach.

Boldly challenge altcoins

What does this history have to do with altcoins? The primary audience for altcoins is not users, but speculators. This market does not welcome minimalism.

In a space where making bold claims is fundamental to getting investment, right? Sound familiar? Big front-end design is once again an operational truth, and a quick glance at any ICO whitepaper shows a departure from the early, bug-ridden software development phase.

An example of a flaw in ICO activity is the lack of address verification procedures in the Ethereum value transfer interface.

Countless Ethereum users have sent money to misspelled addresses. These address checksums are a feature of Bitcoin, preventing countless users from mistakenly sending money to invalid addresses.

While the crowdsale matched the development goals to the initial list of promises, Ethereum did not offer much incentive. As a result, address verification was not critical to the project’s implementation, and the vague goal became independent of the proof-of-work mechanism.

Economic activity based on investment

So why are developers and venture capitalists seeking capital with tokenization strategies?

While these tokens are sometimes needed for new-age software development, tokenization has become more important than blockchain innovation itself. Many offline businesses issue tokens in the form of gifts and coupons, and so do online businesses. Social media sites often issue "upvote karma" and game assets and currencies commonly found in video games.

Blockchain innovation is not important for redeemable tokens. Crowdfunding is not new. Many software development projects use Kickstarter and Indiegogo.

ICO supporters focus on decentralized markets because investors can transfer shares to dumber people in the secondary market; and places where the pursuit of wealth culture prevails can bring greater returns to unqualified investors. It seems that for these supporters, blockchain can solve the regulatory arbitration necessary for the existence of a securities model without encountering law enforcement agencies that hinder speculation.

The most annoying thing about the ICO market is that investors often don’t use the blockchain and the products. Most ICO investors don’t even bother to withdraw their tokens from the exchange or use the software they invested in. The quality of the software doesn’t matter because the only people who use it are the exchange operators who use it for settlement between exchanges.

Magazines such as Brave New Coin announced the start of ICOs, which were hyped up by marketers to be infinitely large, leaving project leaders to manage the projects while they themselves were responsible for hyping up the projects to investors, and then selling their shares to these investors after the projects were launched.

It is impossible to determine whether these token projects will create economic models without investment, but recent facts cannot prove that speculators do not exist.

Sustainability and speculation

In 2016 we have a more effective model for developing useful and sustainable infrastructure software: the open source model, where software mechanisms are closely tied to the needs of programmers and users, rather than the goals of speculators.

As for the model of developing commercial software, it can be achieved with a minimal product, or by allowing the community to develop tools targeting students, and then iteratively generate more useful projects, giving companies the opportunity to scale up.

The pursuit of quick money is the main reason for the speculation of altcoins, and many ICO supporters are eager to cover up their rational analysis. However, the demise of countless altcoins in recent years proves that there is nothing new about this ICO speculation. It is just a disguised ICO that continues to be used by speculators to satisfy their desires and drive the blockchain craze.

There is nothing new to examine about ICO speculation, but it continues to punish thrill-seekers as it has run rampant.

However, new markets have emerged in the decaying altcoin market, and new speculators continue to operate with the hope of getting rich quickly.