The Trust Problems of Crypto-Investing - An Intro to Utrum, the Grass-Roots Project born from an Investors Slack
It’s no surprise that cryptocurrency investors are becoming more reticent to participate in public crowd-sales. In just the first 4 months of 2018 we’ve already seen, and some have experienced, the worst scams and fraud to date.
April, 2018 — Vietnam is investigating two ICOs thought to have defrauded investors out of $660 Million. If the charges are found to be true, this will be the single largest exit scam to date in cryptocurrency.
March, 2018 — Giza, aka “Giza Device”, scammed investors out of ~$2 million post ICO.
February, 2018 — LoopX pulls an exit scam on investors, taking roughly $4.5 million in ICO funds.
January, 2018 — Bitconnect pulled off another of the biggest ponzi-turned-exit schemes in crypto history, the pyramid dissolving into the sands of blockchain in early January along with millions of dollars of investor funds.
The list goes on and I’m not going to bore…or trigger…you with the multitude of scams from 2017, or the mass amounts of misinformation being fed to investors and the volume of noise in the industry.
The problem with scams, fraud, shills, etc, is a problem of TRUST…the lack thereof.
A Problem of Trust + An Industry Suffering Serious FOMO
The problem of trust in cryptocurrency investing is not limited to outright scams. Many projects use aggressive strategies of shilling, buying reviews and rankings, or are caught in the awkward position of having over-promised.
Trust within cryptocurrency is the most valuable currency of all…and the most rare.
And then there’s the other side to the equation…the fear of missing out and the frenzy of greed.
Many people have felt that FOMO burn inside, drawing their heart rate up and their wallet out. And of course, some do make big winnings, further fueling future FOMO…whew.
While many fall prey to FOMO, other well-meaning investors who are doing their best to identify smart plays still fall victim to scams, fraud or over-promised let-downs. But if we are going to be honest with ourselves, the sirens of FOMO lead many more a’sailing on the seas of cryptocurrency investing, into the rocks of scammy ICOs.
Trust: A Relationship Issue
Especially in an industry where trustless parties can interact via trusted, transparent contracts, is trust so important…ultimately every line of code needs trust and transparency behind it to support such a trustless economic interaction.
At the end of the day, we place our faith in people.
These people are most often developers, auditors, experts, voices of authority who have proven themselves through consistent and trustworthy actions, creating flawless code or being transparent in how they interact with the community.
Trust in people can be transferred to trust in projects, teams, code, ICOs. Ultimately, trust is a relationship issue, involving how we relate to one another whether we’ve met In Real Life or not.
These trust relationships are the most valuable, but how do we accommodate the fast-paced growth of the blockchain industry with new and unknown teams, projects and companies eager to join the innovation revolution?
When it comes to sustainability in blockchain/cryptocurrency growth, we need solutions in place that allow for automation, community and well-designed systems of trust.
Regulation is Not a Solution
I hear many talking about catering to regulation as a means of encouraging both adoption and even in attempts to “solve” the trust problems we are facing. Besides being contrary to the core principles of cryptocurrency and decentralization, regulation is not an “innovative-friendly” solution.
In fact, regulation is not at all an effective solution for trust.
Even US Securities Jay Clayton understands this. During a talk at Princeton University in April 2018, Clayton was asked if he thought all ICOs are fraudulent. He responded, “Absolutely not.” He continued, “I think if we don’t stop the fraudsters, there is a serious risk [of a] regulatory pendulum — the regulatory actions will be so severe that they will restrict the capacity of this new security.”
While I don’t agree with lumping all cryptocurrency in the classification of “security”, I do agree that such measures would be injurious to the innovative capacity of this industry.
Back to the Human Factor
Trust is about relationships. But how do you aggregate trust and develop a system to measure and output this data for large scaling and growth? Especially in a market easily driven by greed and FOMO where reviews and ratings are simply purchased?
Utrum was born in a Slack channel for the Komodo Project when Sridhar Panasa (Utrum Founder/Project Lead) had the idea to leverage blockchain and decentralization itself, in harnessing “crowd wisdom.”
What if the same social wisdom we find useful in our everyday lives and even the trust we place in proven names in the industry, could be “captured” into data, analyzed, and used for providing reputation-driven results on any upcoming or existing crypto projects, teams or assets?
Not only do we base decisions of trust on already-established trust relationships…we also place trust in crowd wisdom every day…and we also place trust in systems transparently designed to promote trust, honesty, and eliminate manipulation or fraud…for example Bitcoin itself.
And in such systems, there is more reward for being honest and it’s feasibly impossible/“not worth it” to try to out-hash it.
Crowd Wisdom
Crowd Wisdom is a social construct we use every day, often subconsciously as we “vote” on things, people, companies, brands, slogans, memes, etc…and the crowd acts as judge and jury in most cases.
Utrum Founder, Sridhar, who goes by simply “Sri”, wanted to design a system that puts decentralized participation and knowledge to work for a safer space for crypto investing. He wanted to use crowd wisdom while eliminating other influencers such as peer pressure, greed, or manipulation.
What Utrum ended up designing is a crowd wisdom system that is essentially blind folded, backed by a reputation algorithm designed to reward “pure” and honest feedback from the community. By using Ai for fraud management, analytics and reputation development, Utrum is putting trust into the hands of the people.
The final touch is to promote growth and help the Ai in the learning process, which inspired the inclusion of Trustees. Another “human element” to the trust solution, Trustees are voted by the Utrum community and act as moderators in supporting the platform, machine learning, and overall betterment of the ecosystem.
Part of inspiring quality crowd wisdom is putting into place an effective, attractive, well-managed incentives program.
By rewarding members for their provably trustworthy participation, Utrum not only inspires engagement but is creating an ecosystem that is always giving back to the community for their help in creating a better, more trusting crypto community at large.
Of course, where there are rewards there will surely be attempts at manipulation, fraud and gaming of the system. This is one of trust problems Utrum is solving for the industry, but also addressing with the Utrum Platform itself.
Artificial Intelligence-powered Fraud Management
One of the important factors not well-managed (and arguably lacking motivation to manage) is that of manipulated votes and even fraudulent results on most review/ratings centralized sites.
As a project built upon the principles of blockchain, decentralization and bitcoin’s original whitepaper, Utrum is especially aware of the trust issues intrinsic in most, if not all, centralized review platform attempts. Even some of the decentralized approaches lack the ability to effectually mitigate fraud, manipulation or even produce accurate crowd wisdom.
Part of understanding, aggregating and translating crowd wisdom is having measures in place which can effectively filter the results and learn to interpret them. Utrum has developed several complex algorithms which are being applied to several layers of trust for Utrum Platform members, developers, projects, and other roles within the system.
In addition, Utrum is developing an Ai Learning Machine which, with the help of Trustees, will function to analyze data and mitigate manipulation or fraud within the system.
Through this functionality the system is able to effectually reward users for reputable and trustworthy activity. In other words, Trust is rewarded in conjunction with a compounding degree of positive reputation.
The better a user participates, behaves, reviews, contributes, etc…the better their reputation and rewards.
The quality of the wisdom being developed by the crowd is thereby curated and rewarded.
A Foundation of Trust for All
Utrum is a decentralized platform, focused on using blockchain to solve blockchain-related trust problems. And as such, the platform is all about the crypto-community and is coin-agnostic.
Although the Utrum token, OOT (which will be available during ICO May 10) is a Komodo Platform asset chain, Utrum is being built for the crypto-community at large. Whether Ethereum, NEO, or another platform-based project or asset is being brought up for review and analysis within Utrum, Utrum is ultimately a crypto-community focused on quality information and finding trusted guidance for investors and newbies to crypto…being built by and for cryptocurrency investors, developers and enthusiasts.
So much of blockchain is split into factions and pitted against one another. Really, those of us working for the good of innovation, society and the community are all truly part of ONE community and vision.
Personally I began with Ethereum and now work full time for Utrum, have love and involvement with KMD and Groestlcoin, and about a dozen other projects. My love is for blockchain and cryptocurrency, for the philosophies and principles governing this movement, for innovation and the betterment of society, global economy and humanity.
This is the vision of Utrum as well, to make this space a safe, fun, community governed industry where we can find trusted guidance and reduce the nefarious actors while putting the trust solutions in the hands of the people.
Utrum is simply providing the community-at-large with a solid platform where we can all work toward defining trust in cryptocurrency and put an end to the chaos, noise and confusion…and architect a fun and safe space for investors, projects, teams, experts, and newbies to interact and build a brighter crypto-future.
Join The Movement
Learn more about the Utrum project, connect with myself on twitter, and please join the conversation on our Telegram.
We are crowdfunding our project, with our public crowdsale ICO ending June 20, 2018 and we encourage you to join our whitelist if you’d like to participate.
In the meantime, you can learn more about us via the resources below.
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