A sign of the times.

The declining role of decentralisation as a core concept of crypto

Buterin, the co-founder of Ethereum, has consistently criticised ICOs that provide volume discounts. These are discounts that give you a larger percentage of discount or ‘extra’ tokens when you contribute a certain amount.

Buterin thought that these concentrated the tokens to a certain group of individuals which contradicts the essence of cryptocurrencies, decentralisation.

In the past year, decentralisation has become less of an incentive to participate in the eco-system. It’s cold-hard cash which is the incentive and centralised or decentralised projects tend not to differ in their profitability (see: Ripple).

In this sense, many centralised cryptocurrencies are no different to fiat — bar efficiency. Many token sales reserve the right to create more tokens at a future time or hold a large amount of tokens in ‘foundations’ or groups that can release them at any time.

The unregulated space of crypto-trading means that ‘whale’ behaviour, a cute word for market manipulation, can easily occur through these volume discounts. Whales can restrict large amounts of supply while shooting the valuation of the token up through large buy-orders. They’re able to pick the top and decide the bottom — and without a somewhat fair distribution of tokens, the majority of us have no choice but to accept it.

Adding individual caps

The ICO space has seen a huge increase in the ICOs that have implemented individual caps. This is certainly moving in the right direction as the demand for strong teams with good products in the ICO space is extremely high. Yet, this does not encourage any buy-in from the investors apart from money. Many coins shill the importance of community but never truly reward their community with any appreciation.

Without any real buy-in or ideological investment into the project, this same whale behaviour is easily created as individuals quickly flip their purchases to buy the next hot token.

Proof-of-Care, Gems, and the way forward

Proof-of-Care acts in a very interesting fashion. It incentivises investors to contribute to the community and provides them with a very simple economic reward, the ability to participate in the token sale (with or without a discount). It introduces the element of time and ideological or emotional investment to some degree. Although stemmed from a purely economic incentive, my experience in proof-of-care models is a genuine and authentic ideological investment into the product.

This is what I have seen with Gems, and its why I am backing the project so heavily. I wrote my first article on Gems in mid-December, focusing more on their tech and its impact. At that stage, I recall a small Twitter and Telegram presence, perhaps 800–1000 people in their chat. Since then, it has absolutely exploded. The community has created art, think-pieces, and proper critical discussion on the elements of Gems. What many ICOs don’t realise, is that this is worth so much more money than a juicy discount based on contribution.

It takes confidence to do proof-of-care. Critical engagement and interaction with a token-sale can often result in investors realising that the project isn’t as strong as they believe. It turns genuine community involvement into ‘shilling’ and is inauthentic. No amount of money can truly buy belief in a project. I see so many vaporware and white-paper projects reach the Top 100 every few days. The educated crypto-investors know that these are just the flavour of the month and will get dumped. Investing on the greater-fool theory in crypto is actually a very efficient method, considering the buy-in required to truly understand how the system works.

The Gems Community Program ends on January the 8th, I’ve attached the link and I urge anyone reading this to go and contribute to the community and join the token sale. The technology, team, and community is something that can transcend the possible bubble we’re in and make a lasting impact within the space.

You definitely don’t want to miss out. https://blog.gems.org/gems-introducing-the-gems-community-program-750264520cc6