Binance Chain Is Where Shitcoins Go To “Pump And Dump” One Last Time Before They Die
There is a lot of hype around the Binance Chain mainnet and rightly so. While Binance Chain is the largest mainnet by a cryptocurrency exchange, an observer warns that the platform could become home to shitcoins where pumping and dumping would occur.
Initial Coin Offerings (ICOs) were the rave in 2017 and the early part of 2018. However, the ICO token sale process is no longer preferable within the cryptocurrency community. A report by Diar. Co last year indicated that over 86 percent of the ICOs carried out have failed. Also, the report added that 70 percent of such tokens have less value than the prices at the fundraising stage.
The fall of ICOs led to the emergence of security token offerings (STOs) and Initial Exchange Offerings (IEOs). IEOs work similarly to ICOs with the exception that cryptocurrency exchanges host the token sales on their platforms. This process allows projects to access more customers while investors would be able to invest in viable projects from the start.
For consumers, IEOs indicate that a crypto exchange vouches for a project. This reduces the possibility of scam projects getting sold to investors. Token developers would also find it easier to list their cryptocurrencies on exchanges following IEOs. Meanwhile, for cryptocurrency exchanges, they could raise money from listing fees
However, the IEOs hosted on Binance–and others plan to follow suite–show signs that mania is returning, similar to what was experienced with ICOs. Consequently, Binance Chain and other exchanges may as a result of their initial support host shitcoins on their platform as investors/speculators rush for short-term gains over what the project promise in the long-term.
Binance Chain and Shitcoins?
James Spediacci, a cryptocurrency investor and a critic, believes that Binance Chain will be home to shitcoins. He says that shitcoins will integrate on Binance Chain and due to the hype around the platform, they could pump and dump one last time before they die.
As noted, Binance is turning its Launchpad into a one-stop shop for token offerings, allowing project developers to raise funds, and start trading on the exchange from the first day. James says that Binance is using the lessons of the last ICO cycle with IEOs, but the process still contains shitcoins.
Participants should be aware that crypto remains unregulated and despite binding laws in some countries, there is irrefutable evidence reveal that some ramps do record fake volumes to entice customers and projects. A report by BitWise Asset Management a few weeks back reveals that 95 percent of Bitcoin’s trading volume on Coinmarketcap is fake.
The trend of crypto exchanges recording fake trading volumes will continue with the emergence of IEOs. Already, exchanges like Huobi, KuCoin, Bittrex, Bitmax, and LATOKEN are hosting token sales similar to Binance Launchpad. The cryptocurrency exchanges would most likely falsify data to convince project developers that their platforms are perfect to host token sales.
IEO Mania Would Not Stop
James Spediacci doesn’t see the craze around the pump and dump projects stopping anytime soon. He stated that “Since the demographics of Binance customers is either clueless investors or shitcoin gamblers interested in pump and dumps, it just shows they understand their customers well.”
And his views did trigger a debate. According to Crypto Warrior, most investors and traders currently following the Binance Chain and BNB bandwagon don’t care about the shady practices as long as it makes their portfolios bigger.
Similarly, Kamonie Williams gives his two cents saying that there will always be people who will buy into a shitcoin because it has a white paper and can do 1 million tps at mainnet that is five years away.