Source: kenyanwallstreet.com
After releasing the Bitcoin code to the public, Satoshi Nakamoto showed the world how to establish a network and vanish without so much as a trace.
Since then, the cryptocurrency ecosystem has seen the rise of many developers and protocol creators who become crypto messiahs for crypto holders whose best-laid plans end in a catastrophe in case the protocol is rugged, hacked, or left by whimsical developers.
The year 2022 has seen many good intentions go awry, and these have plunged the cryptocurrency market into bear-market territory. The following are examples of such instances and how to avoid similar outcomes in the future:
Some Crypto Network Developers Remain Anonymous for a Reason
Although Satoshi successfully remained anonymous when launching Bitcoin, most instances since then have shown that having anonymous developers can be a red flag.
Many cryptocurrency network developers cite personal safety as the reason behind remaining anonymous. This can be a valid reason for some cases, but in other cases, cryptocurrency developers choose anonymity to hide from previous misdoings or as a pre-planning to hide from being tracked in case of future offenses.
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They also discovered that the developers were anonymous and they had blocked all social media channels from comments.
The crypto market participants are becoming distrustful of anonymous developers which can be seen in the negative reaction to the realization that the founder of the Azuki nonfungible token project had been involved in three other NFT projects that were finally abandoned, leaving the coin holders with worthless jpegs.
Another example of an anonymous developer going rogue happened in 2022 after it was revealed that the anonymous Wonderland (TIME) treasury manager @0xSifu was suspected of financial crimes, along with Michael Patryn, a QuadrigaCX co-founder.
Source: Twitter.com
This revelation led to the collapse of multiple popular projects like Popsicle Finance and Wonderland.
Anonymous developers remove accountability from the equation and are increasingly becoming a red flag when dealing with cryptocurrency projects.
Watch Out for Cult Personalities
Cases of cult personalities in the finance sector are not strange and cryptocurrency is not immune to this phenomenon.
Long-time crypto traders will remember Roger Ver being referred to as “Bitcoin Jesus” and leading plans to fork Bitcoin Core to create Bitcoin Cash (BCH). Another example is Billionaire Dan Larimer who helped EOS raise $4 billion during the Initial Coin Offering boom of 2017/2018. The two instances turned out to be cases of a fervent group of followers whose agenda was to propel each project forward.
Neither BCH nor EOS reclaimed their all-time highs in the 2021 bull market despite the hype about their future when the two projects were being launched. One of the reasons could be because part of the hype was from individuals who were behind the project.
Cryptocurrency investors should be vigilant when a developer is portrayed as incapable of doing wrong and know that the outcome of cult-like followings ripples beyond their crypto community.
Decentralization should involve the Community
Cryptocurrency traders should also be on the lookout for crypto projects that operate in a centralized manner while claiming to be decentralized.
Source: zipmex.com
It is common to find protocols that claim to be decentralized yet they depend on centralized service providers such as Amazon Web Services to ensure that they run smoothly.
Cryptocurrency investors should also watch out for projects that claim to offer token holders governance rights but makes a major decision without seeking approval or feedback from the community.
One of the major principles of any cryptocurrency project is adherence to decentralization, failure to which leads to dissatisfied cryptocurrency investors and a compromised network.
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