The death of ICOs?

The ICO hype has died down a lot in recent months. For a moment in 2017, it seemed as though there would be no end to them. People built careers off shilling them. Some people made money, many others lost money. With the dust beginning to settle, we asked whether you thought ICOs were truly dead over on Twitter.

Your views imply that they are indeed dead, although the idea that they are hibernating through this bear market came a close second. I for one truly hope that ICOs do not make a reappearance, although I do have my doubts over whether this will be the case.

Early ICOs

Naively, when I first heard of ICOs, I thought they were an interesting idea. By allowing the public to invest in start-ups, companies could access a wide range of funds. Not only did this mean that the very wealthy could get in on the ground floor, so could you and I. Although this was my initial belief, I never once invested in an ICO as there were too many what if’s.

As it turned out, ICOs became somewhat of a plague upon the cryptocurrency space. The majority of them had poor white papers and no working product. Despite this, the money flooded in. Greed became king in an already greedy space. Those with a small amount of business nous and an appetite for a quick buck soon made their move.

All of a sudden, ICOs were everywhere. The main use case of Ethereum became the fundraising platform it offered. Added to this, people were able to build brands off shilling ICOs. In a bull market, they could point to their results and their skills of being able to pick which ones would be successful. Those skills have since proven to be overrated, as picking a successful ICO in a bear market becomes much more difficult.

Influencers

On top of this, due to their success, companies saw that if they could use an influencer to shill their project, they would likely raise even more money. So, paid shilling became even more of an issue. The legality of such was questioned at the time, and now we are seeing the SEC crack down on the practice.

The ICO craze has made the call for regulation within the space that much louder. Unfortunately, we as the public cannot be trusted to use our freedom wisely. We can criticise those businesses that took advantage of the ICO situation. We can criticise those who became influencers increasing their personal wealth at the cost of others. Also, though, we should take a look at ourselves. For those that lost money, yes you can blame the scam, but some of the responsibility was your own for getting caught up in the hype.

With a new-found suspicion of ICOs within the community and from the SEC, coupled with the bear market, the hype has died. Speaking to companies at conferences though, many are still planned. With ICOs now being tinged with suspicion, expect to see them rebrand as STOs. Security Token Offerings will probably be similar, just with a rebranded name and a few more legal hoops to jump through.

Until we see another bull market, it is hard to determine what the new STO phase will look like. We can only hope that the lessons have been learned from the 2017 hype cycle.