Part 3 - Potential and Pitfalls
In Part 1 of our series, we looked at the geopolitical aspects, while in Part 2 we explored the alt-coins which are shaping the future of finance, digital payments and the tokenization of real-world assets (RWA). In this final installment of the series, we will look into the proliferation of meme-coins, A.I. Agents and crypto scams.
When prospecting in the 1800s, the saying 'All that glitters is not gold' was developed. Similarly, in the new frontier of cryptocurrency, we should recognize that there are many 'snake-oil' projects poised to extract value from unsuspecting investors. Before spending your hard-earned money on digital fool's gold, here are three common pitfalls to look out for:
Meme-coins that are not backed by a real-world asset, process or product. At best, meme-coins are digital collector's items based on a personality or cultural fad. When the fad fades or the founders decide to exit, the price of the coin will tank. A recent example of the end of 15 minutes of fame is the Hawk Tuah coin which is now being sued as a pump and dump scheme.
Unlimited supply of tokens. Just like a share IPO, when a new project launches it nominates its maximum supply in the ICO (initial coin offering). Many meme-coins nominate an unlimited supply which allows the founders or governing council to print new tokens to infinity. Under such a structure, there is nothing to prevent a sudden supply shock reducing the value of existing coins drastically - potentially all the way to zero over-night.
A.I. Agents: Artificial Intelligence is quickly morphing from a response-based bot program (GPT) into a series of autonomously AI agents that can self-generate crypto projects. A.I. Agents such as Virtuals Protocol and Ai16z are already generating and virally promoting thousands of crypto projects making it harder each day to separate legitimate projects from scams. Crypto proliferation can quickly become crypto pollution and cast a shadow over the whole sector.
Last week, the crypto world was aghast when US President Trump and First Lady Melania launched their own meme-coins on the Solana platform. Intended to leverage the excitement around their launch and the broader interest in cryptocurrency, these coins had 80% of the tokens withheld, causing the limited supply released to rapidly drive up their price due to the FOMO effect.
Both the Trump and Melania coins were officially endorsed and had a release schedule and a capped maximum supply of 1 billion coins. However, scammers were quick to pounce on the trend, releasing the fake Ivanka coin. All this underlines the lack of regulation and clarity surrounding what is a real security, what is fake and what is a conflict of interest. But gambling is addictive, particularly when personalities like Kyle Sandilands highlight the quick bucks they make of such projects.
In Australia, the crypto sector is also seeking clarity from the government as to what are the rules and protections for its citizens around investing and reporting on crypto projects. The global nature of crypto makes it difficult for Australia to lead on crypto regulate, but absence of action is still no excuse. With an upcoming federal election, Australians should demand that both the government and opposition to present a clear and concrete roadmap for the Australian crypto sector. In the meantime, crypto investors and developers should proceed with both eyes open. The open crypto frontier simultaneously presents great potential and also great pitfalls.
None of the content above is intended as financial advice. Rather it is provided as a fast-moving technical overview of the cryptographic landscape.
The ACS Foundation and Crypto:
The ACS Foundation exists to help Australia's next generation of technology professionals plan and build their careers. The Foundation encourages students to build their skills in emerging technologies, including cryptographic technologies. The Foundation offers technology scholarships and work placements to help students build applied technology skills.
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