To the Moon or to Goblin Town: Navigating the Murky Waters of the Crypto Space (I)

You  most probably have heard or come across that popular phrase “to the moon”. Sometimes it comes with an emoji of a rocket blasting off the earth. Well, in the crypto space “to the moon” simply means the price of a cryptocurrency or crypto asset reaching a new high,  thus resulting in great profits to investors.

But here is an antithesis to that ‘moon journey’ and it is usually not spoken of enough in the crypto space to engender responsible investment. This antithesis is known as “to Goblin Town”. Yes, the Goblin Town. Heard about that before?

Here’s the ironic and peculiar thing about ‘Goblin Town’: It essentially means that you will lose a lot of your investments. Sometimes it is difficult to stage a comeback from Goblin Town. But as we all know, only the strong survive in any space. And it is in Goblin Town that most astute crypto traders are born. After making it out of Goblin Town, that remark by the World Economic Forum (WEF) about the year 2030 that “you will own nothing and be happy” would begin to make more sense to you.

As you begin to bask in the euphoria of the start of another bull season after the ‘mini bear’ we had from May 19 2021 to July 2021, what I seek to do in this piece is to draw up a frame of caution at the back of your mind about how to navigate the murky waters of crypto investments.

The idea is not to scare you away from cryptocurrency investments. I won’t do that. I believe I have made a lot of money from cryptocurrencies. It changed my life. And I believe it can change yours too. But you must be able to navigate the pitfalls inherent in the crypto space. As it is characteristic of any nascent or emerging space, there are considerable risks and threats. Also, the crypto space evolves everyday. And as the space evolves, it continually expands in scope, shape, and size as well. For instance back in 2015, Non Fungible Tokens (NFTs) were not  well known but today everyone is talking about how NFTs will change the world—even when many people don’t exactly know how.

Investing is serious business. Ordinarily, we shouldn’t have people purchasing cryptocurrencies or crypto assets simply because a shill—a paid marketer or online advertiser—claimed that they are the best coins or tokens after bitcoin. Others hear that  someone or some persons have become millionaires overnight from a crypto project and without first doing their own research and due diligence on the project, they jump into what eventually turns out to be a pit.

Getting money is difficult but keeping money is much more difficult. Whether “to the moon” or “to Goblin Town”, you must never forget that in investment, your first priority should be  protecting your capital and not the gains you are chasing. Many investors make the mistake of  chasing after a running bull only to realize albeit too late that it would have been better to stare the bear in the face.  Let me tell you a true life story.

Mr Heichman opened Twitter on the cold morning of June 14, 2021. He stumbled upon a trending coin on his timeline. The  coin was called Iron Titanium Token (TITAN). At that time, TITAN was priced at $31 per token and it promised to be one of the best investments of 2021. The fact that TITAN  was trading at $3 on the 3rd of the same month of June 2021 made its promising outlook strongly compelling. Mr Heichman had to get in before the price moved to $100 as he didn’t want to miss out on the expected mooning. Hence, Mr Heichman purchased $1000 worth of TITAN and went back to sleep, dreaming of the cash-out day. (Take note that Mr Heichman’s investment decision was triggered by what is called FOMO {fear of missing out}. FOMO is what largely drives  many people to invest in a coin or token without  conducting their own research or  due diligence.)

While Mr Heichman was dreaming of blasting “to the moon”, there was another man named Mr Fred who understood that in crypto there is a thin line between “to the moon” and “to Goblin Town”. Mr Fred discovered  TITAN  on social media  just the same way Mr Heichman did. But Mr Fred  stepped back from the noise; the hype. He started by checking the TITAN contract address. There, he discovered that only about 3 persons owned more than 85% of the entire TITAN tokens in circulation. Of course this meant that these 3 persons could dump their  token whenever they wished to. So Mr Fred eventually decided  to keep his money to himself. He  was watching how things would unfold.

On 16 June 2021—just 2 days after Mr Heichman bought TITAN—TITAN price fell from $38 to $0.00000056! YES, you read that right!  TITAN lost almost 100% of its price value. This sharp drop effectively took Mr Heichman’s $1000 to $0.00001806. TITAN was indeed titanic. From dreaming about a journey to the moon, Mr. Heichman ended up in Goblin Town.

Don’t be like Mr Heichman. Emulate the brilliance and meticulousness of Mr Fred whose research and due diligence saved him from ending up in Goblin Town.

So at this point you might be wondering how you can identify scams in the crypto space. For me,  I always listen to my gut in investing. If something feels off, then it probably is off.  I will give you a list. But believe me, the following list is not exhaustive:

1. Historical data of the project’s proponents: A project is only as important as its founder(s). It is the project founder that largely breathes life into it.  So be interested in knowing the projects that such founders may have handled or be involved in. What became of those projects? Also do the proponents or promoters of the project have any history of scam?
2. Use case: Considering the use case of the project you wish to invest in is also important when making an investment decision. While believing in or having faith in a project is good, blind faith is not good for your investment health. You should understand what the project is about and the solution it seeks to bring to the market. This will help you determine better how much of your money you should invest in the project.
3. Community and adoption: A serious or promising project usually has a thriving or at least a growing community of adopters or users. Although this is not directly proportional to the price,  a project with a community of adopters—not some rented crowd—can be quite reassuring.
4. Period of token lock for dev team: At the very least, the period for locked-up token by the project developers should not be less than 2 years. This will guarantee that they’d put in their best to make the project a success because they also have ‘skin in the game’.

With  the proliferation of ‘shitcoins’ otherwise known as scamcoins and their impact on the crypto space, it is my hope that noobs (a new comer to the crypto space) and OGs (a fully bred crypto enthusiast) make it a point of duty to always carry out checks before investing in any crypto project.

Read also: To the Moon or to Goblin Town: Navigating the Murky Waters of the Crypto Space (II) 

Gideon Ajose is an Ambassador of Huobi Global and Community Manager at Earnathon. Twitter handle @ajosegideont