Cryptos taking their place as an alternative investment vehicle

Cryptocurrencies attracted the interest of a wider audience than just tech-aficianados. Thus raising the demand for these goods. The largest cryptocurrency, Bitcoin, started the year under $1000 and reached a maximum value of $17.900,- the 15th of December. Besides Bitcoin, several other crypto-currencies gained market values over $1bn such as Ethereum, Ripple, Cardano and IOTA. As the Economist points out are new cryptocurrencies issued almost daily, mostly through so-called initial coin offerings (ICOs).

The ICO market exploded to over $1BN issued last month.

We visualised the main characteristics of the ico market in order to delve into the market developments of these ICOs. First, we scraped token data from Tokendata using a Python Selenium crawler. In our analysis we use the ICOs of January 2017 onwards. This allowed us to show the amount of US dollars raised in each of the months of 2017 and planned to raise in 2018. As one might suspect, the amount raised in the first half of 2017 dwarves that what has been raised in the second half year. The growth in the amount raised seemed to plateau in the autumn months, but the amount raised in December 2017 grew to such a number that it was roughly equivalent to the total of the first six months of the same year.

The number of ICOs keeps rising
The number of successful and failed projects seems to be a more robust measure of the popularity of this financial product given that it is less sensitive to a few large successful issues. In June three separate issues, The Bancor Protocol ($153M), Status ($107M) and Tenx ($83M), raised more than the other 32 successful projects in that month, thus explaining a one-off peak of the amount raised. Although it might be premature today, we note that the number of completed projects in January 2018 is still behind that of December 2017.

Most popular categories are not the ones with the most money.

We use data from ICO Watch List in order to show what industries are raising the (most) money and from which country the money is raised. We note that while projects active in the Network/Communications and the Blockchain Platform categories raise the most money, these are not the categories with the most projects. ICO Watch List reports that 16% of the ICO projects are Finance related, where related categories Asset Management and Payments/ Wallets stand on its own.

Largest token issues in 2017 and January 2018
We selected the 20 projects that raised the most money since January 2017 according to Tokendata. Subsequently we manually assigned a category to each of the top-20 items based on the categorisation of the ICO Watch List. This resulted in that ICOs needed to raise at least $50M to be selected in our top 20. As we expected from the first pie chart, are the largest projects active in the categories that raised the most; Network/Communications, the Blockchain Platform and Payments/ Wallets.

Return on tokens

Based on the current token value and the issue token value, we calculated the returns for the top 20 ICOs for which Tokendata reports the current token value. These are just the raw returns, that are not annualised. Tokendata did not report current token value for 5 of the 20 ICOs, therefore these are not included in the return chart. The items are sorted on the amount raised. We see that by the 12th of January all included top-20 ICOs made a positive return. Although the number of Finance items is small, we see that both items have a more than average return.

Distribution over countries

The frontrunners in the ICO market come mostly from the countries you expect it from due to their (economic) size such as the United States, Russia and Great Britain, but also Australia, Gibraltar, Singapore, Switzerland and Lithuania are among the countries that raised the most money. One of the main reasons for countries to have more or less projects than what you expect based on their economic size is the leniency and opaqueness of the guidelines of the regulator. China is no frontrunner in this field, since ICOs are banned.

Future of ICOs

More high-profile, exciting ICOs are expected to take place.Kodak will issue a token that will allow photographers to pay for licensing their photos. Techcrunch reportsthat Telegram has plans to raise as much as $500M in a pre-ICO sale.

Credits for the data analysis and visualisations go to Node1’s newest Data Scientist Fernando Vieira.

This blogpost originally appeared on Node1. A boutique digital consultancy and development firm that delivers innovation, data science and IT services to Tier-1 corporate clients.