Floyd Mayweather And Other Celebrities Are Betting Big On ICOs — Here’s Why
Celebrities have been known to do some interesting things with their money.
While there are those who find ways to spend their millions even faster than they’ve made them, other celebrities find creative ways to reinvest their earnings. Peyton Manning owns 21 franchise locations of Papa John’s, rapper Rick Ross owns 25 franchise locations of Wingstop, and Shaquille O’Neal owns an astonishing 155 Five Guys Burger locations, forty 24-hour Fitness Clubs, and 17 Auntie Anne’s Pretzels. Jessica Alba invested in herself and launched The Honest Company, and LeBron James invested in Beats Electronics before it was sold to Apple — earning him $30 million.
Now, it seems celebrities, musicians, and athletes have turned their attention to the ICO craze. In fact, one of the first investors in our company, Chronicled, and an early believer in the work we’re doing with IoT and blockchain, was Marshawn Lynch (hey, hey @moneylynch — we give love where love is deserved). #beastmode
But some ICO investing attracts the wrong kind of attention.
One of the most vocal about his involvement in a recent ICO is Floyd Mayweather, leveraging his social media following to bring attention to Hubii, a distribution company with 50 million customers.
It’s certainly interesting (and validating) to see celebrities and successful individuals investing heavily into ICOs, recognizing their potential and acknowledging the value of Bitcoin and Ethereum.
Another celebrity that has gotten on board is Paris Hilton, writing on Twitter that she has invested in LydianCoin, a blockchain platform that provides “targeted, AI driven digital marketing and advertising services,” according to Business Insider. The ICO is aiming to raise $100 million.
Most recently, Actor Jamie Foxx endorsed Cobinhood, which is being advertised as a zero-fee crypto exchange.
What I think is worth pointing out, though, is that while it’s certainly great that these highly influential people are bringing attention to a still very young and evolving space, sometimes the attention isn’t always showcased in the most positive light.
For example, seeing Floyd Mayweather on Instagram lounging in a private plane with piles of cash from token sales only feeds the concerning press surrounding ICOs right now: that they’re “pump-and-dump schemes.”
The problem with ICOs is that many people see them as an easy shortcut to raising large amounts of capital. And because of the liquidity challenges, they are. That said, a lot of people are raising money on the speculation that these tokens will amount to something, when in reality, entrepreneurs are quickly cashing out and running away with the money and not delivering a product. Mayweather flaunting his successful investments in this area only perpetuates this cycle, casting the blockchain community in an unfortunate light — even if the companies he has invested in are poised to become successful.
Now, I’m not suggesting that ICOs are in any way bad for the blockchain community. In fact, it is my personal belief that ICOs are in many ways helping the community. How? Well, for starters, by bringing attention and publicity to innovative products and services. By allowing these innovative companies to scale through access to vast amounts of undilutive capital. By laying the groundwork for regulation and global acceptance. And ultimately, by helping the community of developers, entrepreneurs, and technologists realize the true potential of the underlying technology.
While I am in full support of responsible and compliant ICOs as a disruptive fundraising vehicle, it is still important to remain diligent and cautious.
Here’s what you should remember before jumping on the bandwagon:
Celebrities have always held a position in society where their actions influence the behavior of the masses — whether it’s Michael Jordan drinking Gatorade and encouraging young athletes to do the same, or Leonardo DiCaprio encouraging others to speak openly on climate change. The voice of a celebrity is one people listen to, regardless of whether they agree with what they’re saying or not.
But when it comes to investment advice, I would urge general consumers to be wary of celebrities backing ICOs or flaunting their successful investments. In a way, it makes me think of influencer marketing — since that’s precisely what it is — and how a celebrity might not eat McDonald’s, but that doesn’t mean they won’t Tweet about it.
The same concern should be raised in regard to ICOs. Just because a celebrity has been vocal about their involvement, doesn’t always mean it’s a wise investment decision for you.
The truth is, cryptocurrency is a volatile market, especially right now.
Do your research and due diligence. Invest in the companies you believe in, ones that are backed by intelligent, committed people. And don’t get too caught up in what you see on Instagram.