The current gold-rush, wild-west environment in the crypto world feels somehow familiar. It’s like… we’ve been here before!

And indeed, just 17 years ago, crowds of investors were pouring money into pets.com.

Why did they do it? There was easy money to make. (At least everyone thought so.)

How did it end up? The Nasdaq crashed from 4800 to 800 in just two years. It took 14 years to recover and finally surpass 4800 again.

We may not be at the same place in the crypto markets just yet, but from looking at the chart of global capitalisation for blockchain digital tokens (the new definition for stock), one could assume that we are on the brink of an exponential rise. It might look similar to what happened right before the year 2000 Nasdaq crash.

So… does this mean we should get in on the gold rush now?

Only if the risks are clear and one can handle them.

The risks are two-fold. On one side, exchanges get hacked. Regularly. Some exchanges disappear with clients’ money. To mitigate these risks, it is highly advisable to store your crypto assets in a cold wallet or hardware-wallet.

On the other side, there is a risk less known at the moment, but it is constantly growing. And that is that crypto projects may not be able to deliver any value. Collecting money through an ICO (initial coin offering) is getting easier, but building a real product is more complicated. Just because a team may be able to raise a substantial amount of money doesn’t mean there will be an amazing product at the end.

Can we do anything to improve success rates — or predictability — before people lose increasing amounts of money on failed projects?

Unfortunately we can’t do much on the investor side. There are too many investors and traders with vastly different outlooks and levels of experience, and the majority are controlled by crowd sentiment.

For those of us building products, however, we can do quite a lot.

We could, for instance, not to rush for ICO just to collect as much as possible (uncapped) from mostly inexperienced investors.

Instead, if we involve angel investors at the earliest stages, we could engage with professionals. More and more angels are turning toward crypto markets, and the time window is ripe as it is pretty easy to collect money from the crypto crowd right now.

Angel investors can also bring much more than money. They can give clear reality checks regarding business models or legal aspects of the business. The crowd today rarely asks for a business model (or the voices of those who ask are few and easy to ignore). But any product — even a sexy blockchain one — must generate value at some point. To bring in business experience at the beginning might pay back later on.

After initial angel stages, it might be reasonable to go public and make a capped fundraising round.

If this is a round for 100% of tokens, or a round A for, let’s say, 10% (depending on the business specifics), having a clear goal would help prevent the team from “promising too much” based on unproven concepts or assumptions.

Indeed, if one raised even 5 mln. USD (in exchange for 100% of digital tokens) for a pioneering project, where is the guarantee that this money will be enough to complete it? I believe if we, as creators, try to reduce the risks for our investors by iterative delivering a product with clear goals on every step combined with capped fundraising, we might get some positive long-term results.

We are already taking this approach with the santiment.net project and will share our experience as we go through it. From conversations at the Ethereum DevCon2 conference in Shanghai the last week, we learned that several other teams have a similar point of view. It will be great to continue listening to these voices, and learn how we all can support sustainable development in the crypto space.