For a decade, cryptocurrency has been revolutionizing the investment sector and has posed to be a gold mine. As the crypto market thrived over the years, several blockchain projects were launched into the scene. One of those projects is the concept of initial coin offerings. Now those who are crypto addicts know that Initial Coin Offerings has been a lucrative fundraising avenue for startups seeking capital for the growth of diverse projects. By virtue of these ICOs, billions of dollars have been realized in the blockchain scene. In fact, 2017 was the year of the ICO as the sales of tokens hit the roof. 2018also took off and ended well as it pulled in13.7 billion dollars which is double the amount from 2017.
However, recently people and governments began realizing the pitfalls with ICOs, such as the absence of central regulatory guidelines, the emergence of the bear market, ICOs being unable to achieve the goals on their roadmap and the launch of fraudulent ICOs. This has made countries and investors more cautious and has caused a downward slope in the value of ICOs. Due to these happenings, the question of are ICOs dead? Continuously floods the media. In answer to this, we say NO! In this article, we would be taking you down the reasons why despite the hurdles faced by ICOs, they are very much alive and kicking.
ICOs Reign In 2017 And 2018.
In the years 2017 and 2018, a vast number of investors were literally financing the visions of ICOs as seen in their white papers. These finances amounted to billions of dollars. Flowing from the above, according to the statistics released by ICO data, 2017 witnessed the birth of 875 ICOs all of which pulled in the sum of six billion dollars.
In 2018, the number of ICOs launched increased to 1166 and over 13.7 billion dollars was realized from its existence. These figures were fueled by the fact that ICOs engaged several strategies for cryptocurrency digital marketing such as bitcoin/SEO cryptocurrency. Also, projects which had nothing but a simple website and unimpressive whitepaper suddenly realized millions of dollars from the sales of their tokens. However still in 2018, despite the success recorded, the world began to notice the pitfalls in token sales such as the absence of a central legal and regulatory framework in some countries while in other countries a framework was completely lacking. There was also the threatening presence of fraudulent ICOs continuously ripping investors of their monies and the fact that in the third quarter of 2018, 50% of ICOs did not reach their goals. In a bid to save the situation, the Securities and Exchange Commission of countries like the US went all out to publicly prosecute ICOs that sold unregistered securities. Consequently, the ICOs market took a major hit, funds dropped drastically and things began to look gloomy. Hence the fear of ICOs losing relevance. Having said that, let’s consider in detail what went wrong and if there is indeed any hope for ICOs in 2019.
What Changed In 2018?
- The Birth Of The Bear Market.
2018 witnessed the zenith of the bull market as investors poured in finances into the market. While things looked good, the bear market subsequently arrived at the scene and decreased the cryptocurrency market cap by an average of eighty percent. Due to this, investors suffered a major blow and were as a result left with the only option of waiting for their investments to recuperate and yield some returns before they invested in any more new ICO projects.
When it comes to legal and regulatory guidelines for ICOs, there are no central guidelines. The regulations governing ICOs vary from country to country. In line with this, countries like Gibraltar and Malta have friendly regulatory ICO policies. However, in the United States, their regulatory bodies and SEC has brought the hammer down by publicly prosecuting unregistered ICOs. With such differences in regulations of different countries, no legitimate ICO would love to go against the law. So several ICOs now prohibit investments from countries with harsh regulations. This has led to a decline in the amount of money that could have been realized.
Expectations From Investors.
Having lost money invested in fraudulent ICOs, ICOs which failed to meet their goals and ICOs which lacked an MVP to support the hype and marketing, investors have become reluctant to put in any extra fund towards ICOs they are unsure about. They are also waiting on the sidelines for previous investments to yield profits. Hence the decreased monetary value of ICOs.
2019 ICO Predictions.
Now, we do agree that ICOs have had it rough recently especially with the existence of the bear market. However, judging from the amount of money realized from the close of 2018, it is quite obvious that the ICO market has not exactly gone bankrupt and funding is still possible for new projects. Certain requirements must, however, be met by these ICOs.
Firstly, there is a need for ICOs to be unique and genuine. They should primarily focus on ways to address market needs before engaging blockchain technology. When they have an idea of needs they intend to solve using blockchain, they can then go on to effortlessly create a community of investors and engaged users.
Secondly, they should put together a team of individuals that possess expertise in the industry they are focusing on. This would be more productive than opting for influencers. Avenues such as bitcoin/cryptocurrency SEO service can also be engaged.
Lastly, they should not attempt to curtail the necessary expenses for the development of the product as technology in order to boost profit. In the long run, it becomes a wrong move. When the necessary steps are covered, ICOs would effortlessly thrive.
On a final note, in response to the question are ICOs dead?. My answer is no. It is, in fact, more mature and stable than before. This is because ICOs are now required to obey regulations, have a well-prepared whitepaper, a good team, and an MVP. Additionally, the fact that investors take the time to research before investing is also a contributing factor to the recent maturity of ICO projects. Plus it to an extent weeds out fraudulent ICOs.
Having said that, there are tons of other opportunities in the blockchain network that can be explored to better the cryptocurrency and blockchain scene. Such opportunities are the Security Token Offerings (STO) tokenization of assets and Non-Fungible Tokens (NFT)
Disclaimer The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.
Passionate about Blockchain and has been researching and writing about the Blockchain technology for over a year now. Also holds expertise in digital marketing. follow me on twitter at @sagar2803 or reach out to him at sagar[at]coingape.com