VIDEO: BlockSpace Labs CEO Mukhtar Mussabetov on Investing in the Right Cryptocurrency and Blockchain
As of recently, there are more than 800 completed ICOs (Initial Coin Offerings) worldwide, with almost USD$3 billion raised this year alone. BlockSpace Labs Inc. CEO Mukhtar Mussabetov joins the Midas Letter again to help investors navigate through the abundance of blockchain and cryptocurrency companies.
James West: Mukhtar, welcome back.
Mukhtar Mussabetov: Yeah, thank you!
James West: Mukhtar, let’s start with an overview: what is the origin of your expertise in all things Blockchain and crypto?
Mukhtar Mussabetov: Well, my expertise originates in traditional investment industries, and dealing with some results, the Basel act, as a basis for IPOs these days, and any inevitable stock exchange. And I also have a lot of corporate management experience plus launching my own technological start-ups.
James West: Okay.
Mukhtar Mussabetov: So I have, you know, many perspectives. I can look at Blockchain from many perspectives.
James West: Okay. And so tell me, what do you think about the current, crowded landscape of new Blockchain and cryptocurrency opportunities?
Mukhtar Mussabetov: Well, as of November 6th, we have 1451 ICOs already launched…
James West: ICOs, initial coin offerings?
Mukhtar Mussabetov: Yeah. 800 already completed. And more than 400 in process, and 177 launching soon.
James West: Is this in the whole global ecosystem?
Mukhtar Mussabetov: It’s in the whole global ecosystem. The total investment of all time investment reached $3.5 billion, and it’s actually exceeding already VC funding for start-ups. And in second quarter, total investment in ICOs was three times bigger than VC. So you can see that, you know, the industry is moving very fast. But on the other side, it’s 95 percent of Blockchain start-ups are just fakes, cons, or just very weak projects; they’re not backed with solid teams, they don’t understand their ecosystem, they don’t know what they’re doing at all. So they don’t have any business basics before they go for ICO.
James West: So this is not an environment where investors should rush out and buy everything.
Mukhtar Mussabetov: Absolutely. Business fundamentals should be considered in any way, whether it’s with Blockchain or non-Blockchain, you should take from there. So you should look at basics.
James West: Okay. So you said there were 400 completed ICOs this year?
Mukhtar Mussabetov: 800 already completed.
James West: 800, raising a total of three-plus billion?
Mukhtar Mussabetov: Yeah, 3.5, it’s all-time since February 2014.
James West: So what percentage of ICOs fail to achieve their financial objective?
Mukhtar Mussabetov: Well, I can predict that it will be more than 90 percent of Blockchain start-ups will fail, definitely.
James West: So investors need to be very aware that just because it’s got Blockchain on it, it’s not going to be a double?
Mukhtar Mussabetov: Yes, very aware. The thing is that the main driver now from investment side are people who made this wealth on the growth of Bitcoin, Ethereum and some other cryptocurrencies, they made a wealth which came just like a result of speculation, not their own smartness, activity or anything else. So that’s why they want to diversify their portfolios, and they put money in all the Blockchain start-ups they see. So they got it for nothing, and they invest and they don’t see a big fail if they lose it. So it’s like a casino right now.
James West: Sure. So if an investor is approached by somebody offering them an ICO or some other crypto-opportunity, what is the first few steps they should take in determining whether this is a legitimate opportunity or whether it’s more representative of a high-risk opportunity?
Mukhtar Mussabetov: Well, first thing is just look at if they have a prototype already, and how many early adopters they have, users who already own the platform and using this service or product. Then you should look at how solid is their team; how much management experience, technological experience they have, who are on their Board – and it’s not like advisors in the Blockchain world right now, because most of them are just paid a percentage share of tokens just for being on a whitepaper and they have nothing to do with advising these companies, they’re just like an avatar on a whitepaper. So you have to look at the business basics, and you shouldn’t hesitate to just ask the executives to provide some business plans, cash flow expectations, how they are going to spend it, and so on and so on.
So as usual. I mean, business fundamentals applicable as for any other business.
James West: Sure, well, that’s great. Thanks for that overview, Mukhtar. We’ll come back to you soon. Thanks for coming out today.
Mukhtar Mussabetov: You’re welcome, thank you for having me here.
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