Dean Sutton, CEO & Founder of BlockTech Ventures
Dean Sutton"I can tell you right now, if you were to give me a topic in the cryptocurrency space, I could send you a very compelling whitepaper in 72 hours. It has nothing to do with my experience in the industry or any ability to build a team that could build a platform or business that has revenue and adoption."
–Dean Sutton, CEO of BlockTech Ventures
Read With Caution
There are hundreds of whitepapers out there on new cryptocurrency ventures and new businesses that are coming out of the woodwork, all promising that they have the next decentralization solution. The problem is that peopleconsider whitepapers to beactual legal documents, instead of a preliminary mission statement. “It’s an interesting theory to read about,”says crypto-pioneer and influencer, Dean Sutton, the CEO of BlockTech Ventures. But execution is a completely different topic, and industry validation is a third, separate conversation.
But at the end of the day, a whitepaper is just a promise to consumers aboutagiven venture. It’s one thing to learn about a concept througha document or an ICO, but it’s another thing entirely to understand the difference between a conceptual theory and an actual, validated business proposition.
Sutton emphasizes thatthis has no bearing on whether the individual(s) involved can build an incredible business.
Asking The Right Questions
During my conversation with Sutton, I realized that even when talking with influencers in the industry, it’s all about knowing which questions to ask and where to place emphasis. Sutton told me that when an investor or business is looking to enter the crypto space and invest in aparticular coin, token, or venture as a whole, they need to ask themselves certain fundamental questions.
Most companies can never answer this question, because you’re asking them to make a promise to deliver on what seems to be valuable and useful information. Understanding that, you need to look to the utility of the company and why this company,which may have no credibility or track record, is apparently better than a companywhich has been successful with a largely constructed business. Sutton told me that he’s been building and investing in companies, since age 19, and in the crypto-space since 2014.
Armed withknowledgefrom experienced influencers like Sutton, you then have to ask others in the space why they have the distribution, token economy, and distribution of scale that makes their currency better than others in the market. Yes, anyone with a wallet can invest in cryptocurrencies, but at the end of the day, we are all rockstars when the markets rise. It’s the volatility of the markets that changes the game; those instances where people thought they’d be in one financial position, but ended up in a much differentone.
When it comes to ICOs, any company can conduct one. Sutton compares ICOs to a casino—you put money in, believing that speculation and interestfrom people wanting to make money will rise, and drive the price of that market. But, he cautions, this has nothing to do with fundamentals; it’s fear, greed, and perception that drives these types of markets.
Identify Your Exposure Space
Before investing your time, energy, and wallet into this space, it’s important to ask yourself what level of exposure you’re looking for.
- Do you want to try and learn the space, and invest a few bucks?
- Are you trying to put money away long-term, and come back in time to see the gains?
By learning about what cryptocurrency is, how blockchain technology comes into play, and understanding research protocols and platforms, an individualcan become a more sophisticated investor in this new space.That starts by identifying howone can generate revenue by creating a token, and its digital representation, whether a utility or security.
At the end of the day, you’re not investing in ICOs—you’re investing in protocols.
Surround Yourself With The Right People
What does this company have that is unique? Do they have an established platform with millions of users, that will allow the token to thrive with a new business model?
More importantly, do you or those involved understand token economics, game theory, et cetera?
- Who's behind the company?
- Do you understand what the business is built on?
- How is this venture different from mainstream currenciesoff of which it is built?
Likethey would with any investment portfolio, investors need to look at their assets as a whole to understand the risk and return in this space. “Remove the blockchain aspect from your business, and pretend this is a venture investment,” explains Sutton. Then ask yourself, Why am I giving this company money when they haven’t done anything yet to warrant it?
At this point, whether it’s a pre-sale or ICO, there is no fiduciary responsibility to deliver on any promises or statements contained ina whitepaper. There’s no recourse if nothing’s done, no confirmationthat the venture is real; yet people invest anyway.
In many instances, these companies develop a half-baked solution, raise money based on an opportunity, possess an illusive team, throw facts on a page, call it a whitepaper, and advertise their new venture.
Asking the right questions to completely disqualify these companies could save you money, and reveal that most of the companies out there are anything but investment-worthy ventures. "It's a reverse method of building full-heart capital," says Sutton.
