What Do Celebrity-Backed ICOs Say About the Future of Cryptocurrency?

As cryptocurrency swims farther into the mainstream, it has picked up a few unexpected allies. One of the most recent addition to the cryptocurrency community is none other than Paris Hilton, heiress extraordinaire. Hilton tweeted last Sunday that she is “looking forward to participating in” the LydianCoin ICO. Gravity4, the company behind LydianCoin, hopes that the ICO will raise US$100 million; 20 million tokens will be sold at US$5 each.

Though the LydianCoin ICO has yet to take place, LydianCoin has already taken a decent dose of controversy. Gravity4, the company behind LydianCoin, is led by CEO Gubaksh Chahal, who pled guilty on assault charges surrounding the beating of his girlfriend in 2014, which was caught on tape. 

Essentially, the Lydian network and the LydianCoin exist solely as a means to buy advertising services from Gravity4. The advertising services are targeted specifically toward crypto-centric companies, and assist with token planning and execution.

However, Lydian’s advertising strategy seems to be targeted only toward potential crypto investors who are unaware of the online publications that are used by the crypto community at large to gather information about crypto investing–something that gives seasoned crypto investors pause.

The LydianCoin whitepaper makes no real mention of using the Lydian platform as a peer-to-peer transactional network or a settlement layer that can be used to build decentralized applications.

The Changing Face of ICOs

Paris Hilton’s endorsement is the latest in a trend of celebrity-backed ICOs and currencies. Blockchain companies are realizing that there is much to be gained by making ICOs and crypto coins more appealing to the world at large.

Paragon, a coin that has been marketed as a tool to bring about the so-called “cannabis revolution”, is being backed by rapper The Game and Jess VerSteeg, who began a career as an entrepreneur after winning the title of Miss Iowa in 2014. Floyd Mayweather got in on the action when he announced his excitement over Stox tokens and Hubiits.

Additionally, the concept of an ICO as a media “happening” of sorts is emerging in the crypto world. Viberate, which held its ICO this week, livestreamed a DJ on Facebook as a way to launch the event.

Celebrity Backings and the Future of ICOs

A lot of people are making a lot of money off of ICOs, largely due to the fact that they are a new form of crowdfunding that is highly unregulated. If all goes well, both the coin itself and the investor will walk away with heavy pockets that will continue to get heavier as the coin makes its way onto public exchanges and gets adopted as a functioning piece of technology.

However, for every ICO that funds an amazing piece of technology with a solid path to success, there is at least one more that funds an empty, soulless project; what has been affectionately named a “sh*tcoin”. These coins are sold for the sole purpose of pouring money into the coffers of their creators, who can then let the project slowly (or quickly) die while they use the ICO funds on personal expenses.

The most egregious of these scam-coin creators have had legal actions taken against them–Swiscoin and Onecoin (which technically weren’t even cryptocurrencies to begin with) have recently been taken down by various governments. However, there are similar projects with similar intents that are far less obvious–they throw around terms like “next generation transaction network” and “blockchain” with no solid software or team to back up any of the claims.

These coins take advantage of “mom-and-pop” investors who have heard about the crazy amounts of money that can be made from investing in cryptocurrency who may not yet know what kind of research needs to be put into creating a smart investment strategy.

The recent appearance of celebrities into the unregulated world of ICOs could mean trouble. Putting a well-known face on any product is a sure-fire way to get sales, and a celebrity-backed ICO could potential bring a lot of ill-informed investors into a coin that has no future.

On the flip-side, celebrity backings of ICOs could bring more attention to the matter–and, inevitably, further regulations. While regulating ICOs will undoubtedly bring some legal protections to investors, regulations will also cause some fluctuations in the crypto market at large. One such fluctuation happened this week with China’s sudden ban on ICOs.

While most countries are moving towards a more harmonious future with cryptocurrency, we should expect the rise of celebrity culture intermingling with crypto culture to put the spotlight on the crypto world, especially in the United States. So far, cryptocurrency regulations exist on a state-by-state basis, but a federal movement to legislate could arise as cryptocurrency’s journey into the mainstream continues.