Why the Confido Scam Is Good for Crypto
Last Updated: 1st November 2018
For those that do not know, Confido was an ICO project that worked by using smart contracts with a unique shipment tracking feature. When a user makes a transaction, a smart contract will be generated, with the transaction data being recorded in the smart contract. With the smart contract acting as an escrow between buyer and seller, the buyer’s funds are made available to the seller 24 hours after the package has been confirmed. On the face of it, the Confido project was an interesting application of smart contract technology to the courier service. Despite this however, it turns out that the Confido project is just another scam in the crypto-space, and that’s a good thing.
A group of people that threw together a website, a whitepaper, and made some social media accounts managed to get away with approximately $375,000 from the crypto-community. What is most remarkable is that this is not the first time a scam of this nature has happened, there are countless fraudulent ICO projects that have also scammed the community for their funds. Yet people fall for them over and over again. At this point, falling for an ICO scam is like falling for the infamous Nigerian prince scams.
Despite all the bad coming from the Confido scam, ultimately, this is good for the community and here's why:
Encourages thorough research of ICO projects: If Confido could get away with $400,000 it suggests that more vetting needed to be done on Confido. Investing your hard-earned capital is a serious undertaking, so we have to learn to look beneath the surface. Look past the flashy website, and instead focus on factors such as how reputable the ICO team is in the space. In the case of the Confido team, they were essentially a bunch of nobodies. Hopefully this Confido scam will encourage investors to intensively vet future ICO projects.
Deters herd-like mentality: For anyone that has visited the various cryptocurrency subreddit forums, you will observe the often herd-like mentality that is often on display. Individuals that want to get into the next big project so bad, that they follow what the crowd is doing. You even hear of those that invest in an ICO because it is approaching its fund-raising cap, they assume that because everyone else has invested, the project must be legitimate. No doubt that some fell for the Confido scam for one of these reasons. Getting burned, or seeing someone get burned by this Confido scam, should encourage more people to question an ICO project in the future, ESPECIALLY if it’s an ICO that seems to be the current trend.
Produces better ICO projects: As we see all the scams that are occurring in the space, what I see happening is that the bar for what is an acceptable ICO project will be raised. Future ICO projects will have to really go far to prove that they are not a scam, perhaps having to demonstrate a significant longevity in the space with having designed and implemented past projects that still exist today. As of right now, a team can just arrive in the space, and launch a successful ICO without having a significant portfolio of completed projects e.g. Confido. For this to happen, it requires a shift in mindset from investors. We need to be a lot more conservative, and critical with our capital; scam ICOs will be ignored, and promising ICOs will rightfully receive the attention that they deserve.
Hearing about yet another successful ICO scam always leaves a bitter taste in one’s mouth. It damages the reputation of this growing and promising space, deterring those that do not want to fall for a scam themselves. However, I can spot a positive takeaway in the midst of all these scams. Each scam is encouraging us to become more responsible investors, which in turn, will bring about a more secure and reputable crypto-environment.