Is it worth investing in blockchain projects in 2018?
ICO will outlive crowdfunding and IPO
The hysteria surrounding the bitcoin price fall at the beginning of 2018 has spread to ICOs. At the end of February there appeared an article at Bitcoin.com which said that almost half of all blockchain projects which had launched their ICOs in 2017 had failed. The publication of such statistics looked like a caution or even a threat to investors against putting money in blockchain projects.
It was stated that 142 out of 902 projects which had started ICOs last year had failed at the stage of attracting funds, 276 could not carry out their obligations to the investors and make a product. Another 113 ICOs were qualified by analysts as “half failures” — after the end of fundraising they ceased to update their social networks pages and keep contact with investors.
The article has caused a lot of trouble in the cryptocommunity, and many analysts have started to prophesy the end of ICOs.
But is this panic substantiated?
The difference of ICOs from the usual crowdfunding consists in that very little is required for participation in an ICO, therefore practically everybody can take part in fundraising. It became the reason why the market of blockchain projects was flooded by “scams”.
However, experts urge analysts not to include scam projects in the list of failed ICOs as those were not aimed at the obtainment of concrete results.
If we exclude bogus projects, then the statistics of successful and unsuccessful ICOs looks absolutely different and the percentage of unsuccessful ICOs is reduced.
Analysts also urge not to consider those projects which could not collect the declared amount of investments failures and especially not to accuse of failure those projects which are insufficiently active in social media. After all, an ICO is only a marketing campaign, and for the sake of attracting attention to a project all accessible channels of information distribution are used. After an ICO is finished, the necessity to continue high activity in social networks is not so urgent, but it does not mean that the project has ceased to achieve the purpose and stopped developing.
Accordingly, projects which do not maintain a high level of activity in social media can also be taken out of the list of failed projects.
After all counts are made, the number of unsuccessful ICOs turns out not to be so frightening.
Finally, it is possible to compare the percentage of successful blockchain projects with the usual startups.
According to the statistics, out of every 10 startups only one survives the first five-year period. IT IS NORMAL.
According to the research by Shikhar Ghosh, from 30 to 40 % startups backed up by venture capital eventually sell their assets, that is go bust. If this were considered a criterion for a startup`s failure, 95 % of all projects would be classified as unsuccessful.
It is not surprising that half of all projects` ICOs in 2017 failed. Unlike the usual startups they do not follow the beaten track and try to develop and promote an absolutely new technology which many treat with caution. We shouldn`t sweep aside legal complexities, too.
From FairWin’s own experience I can tell you that it is extremely difficult to find competent advisers for an ICO. Most often blockchain startups are forced to make decisions at random and learn from their own mistakes.
Judging from all this it is incorrect to say that half of all projects` ICOs result in nothing. It is clear that the ICO procedure will vary in due course, but it does not mean at all the decline of ICOs as a form of investment attraction.
For investors who put funds in ICOs, the most important thing is to choose from a big number of projects a truly good and promising one which can become successful and come up with a final product. It makes sense to invest in those projects which already have a real product or at least a working prototype.
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