The scary statistics behind 2017’s ICOs
If 2017 was a year for optimism for cryptocurrencies, 2018 has well and truly put the kibosh on that with a slew of negative news coming out of the digital token world.
With last year’s Bitcoin-mania taking the world by storm investors took heed, resulting in the best price we’ve ever seen. And it wasn’t just the casual investor getting caught up in the zeitgeist of digital money – companies were using Initial Coin Offerings (ICOs) to ride the wave and get their big ideas off the ground.
An ICO is a method by which a company uses cryptocurrency to raise funds. For some companies the token they offer is directly related to a new piece of technology or software they’ve created, but in lots of cases the token is merely an investment wrapped up in the hyperbole of crypto-mania.
So, it’s no surprise that we’ve seen a staggering 142 ICOs failed before raising funding this year, and another 276 have failed after they collected their money. These ICOs were launched in 2017 and tracked by TokenData and lovingly picked through by Bitcoin.com, who point out that a further 113 ICOs were listed as “semi-failed” because of a lack of interest and follow-through from the wider community. That makes a total of 59%.
One ICO that seems to have the legs to carry it well past the post-funding stage is Digital investment outfit BnkToTheFuture’s, which has officially concluded a $33 million token sale. “We’ve been doing this quite a while and then [initial coin offerings] came in and started disrupting our industry. Companies didn’t want to offer equities anymore. The large companies were either not willing to do it or they had a model more suited to the ICO model,” co-founder Simon Dixon explained to CoinDesk.
Moving forward, 2018 may see investors approach ICOs with more caution and a more speculative eye. $233m was invested in last year’s failed ICOs and both the average Joe as well as the seasoned investor will be looking for a more secure return.
Bitcoin is currently trading at just over $10k according to the CoinBase index.