There’s another concept, or better a particular word that you need to be incredibly skeptical of whenever you see it. It’s “partnerships.”
This is one of the most common and effective methods that crypto projects use to try to generate hype about their coins and pump up the price. They say, “We’ve partnered with x or y,” or they even make announcements about future announcements. They’ll say, “On this date, we’ll make an announcement about someone we’re partnering with,” or „Something big is comming in two weeks,“ and then quite often throughout my experience in crypto, you look back or you see the small print, and actually, it comes to nothing at all. It’s something like, “We’re partnering with McDonald’s by ordering some Big Macs for our office,” or something absurd like that. In majority of these cases, the damage has been done for investors who invested in those coins based on the false premise that there was some kind of huge partnership occurring that will bring significant adoption to the coin.
Whenever you hear any kind of announcement about a possible partnership, even if it features some massive household name or some enormous company or something, you always need to approach it with an incredible sense of skepticism and ask yourself, “Okay, what’s really going on here?” And you might have to be prepared to make your way through some long, boring document just to see if there’s any real merit to this.
And it’s not always just about scammers. It’s not a one-way thing where a cryptocurrency is trying to leverage the name of some enormous company. It’s actually a two-way streak between the businesses and the cryptocurrencies themselves. I’ll give an example (a fake one, just to be clear) of what I mean.
Let’s say the cryptocurrency Tron partnered with IKEA. I don’t know why they would partner, but let’s just say they did. It would benefit Tron to have the kind of reputable household name of IKEA in that sense, who benefits Tron. But it can also benefit IKEA as well because it gives the illusion that they’re with the breaking edge technology. They want to be seen as kind of in with the cool kids and build their brand. Interestingly, brand IKEA is worth more than the company itself.
You will see quite often a lot of these businesses wanting to benefit from all this hype around the word „blockchain.“ They want to be featured in the press and all these PR articles saying, “Look, we’re up with the times. We’re incorporating the latest technology.” And so it’s very much a two-way streak that both sides can potentially benefit from with all the hype that’s in the air around cryptocurrencies.
But as a long-term investor, we need to differentiate between all this hype, all this buzz, and real genuine adoption. If there’s real partnerships that deliver enormous value, that’s great. But often that’s simply not the case at all. And even if you do see a genuine partnership, let’s say that Tron genuinely partners with Microsoft. The other thing to take into consideration is that a lot of it is experimental. A lot of the time these partnerships can just represent an experiment, and it doesn’t necessarily guarantee that you’ll see a huge amount of adoption just from the announcement of some kind of partnership between them.
They might have an experiment, some kind of project, but it actually never really takes off. It had a huge amount of hype which would have pumped up the price short-term, but then slowly but surely, people realize, “Oh, there wasn’t that much adoption to begin with.” And that’s when you can see the price actually take a hit. That will be the case even if it turns out that this partnership is megasucessful because it will take many years until we can conclude that.v