The ICO Bubble is Coming, Resistance is Futile, and That’s Okay
If you’re involved in the crypto scene, you might have noticed something: ICOs are on the rise, and the trend seems to only be accelerating.
Lately there’s been a lot of negative sentiment expressed about this. The core complaint seems to be that anyone can use an ICO to raise large sums of money, even if their idea is unworkable or they are incapable of executing the idea. Indeed, The DAOsaster is a good example of this fear.
But I’d like to make two points. First, there’s really not much we can do to prevent the coming ICO bubble. Second, this is not a bad thing.
Anyone who either knows Solidity, or can pay someone who does, can start an ICO. They can popularize their idea through social media, and anyone who wants to buy in can do so. Further, the tools to create and participate in these ICOs will only improve — not only as people build these tools specifically, but also as the the ethereum and greater crypto ecosystem evolve. We can discuss this new ICO trend and try to affect community sentiment regarding it, but there’s no way to prevent it, and there’s no reason to expect it to stop or reverse anytime soon.
The ICO bubble is inevitable. But that’s okay, because people learn.
Yes, there will be failed ICOs — but this is nothing new. Failed ventures and poor investments are part of a free market. Some of these failed ICOs will net their founders wealth, even as their purported aim languishes. But this can’t last forever, because people learn. Those that invested in TheDAO will likely be much more cautious. And with each disappointing ICO failure, both the investors and the greater community will view each next ICO with more suspicion.
Today, most people don’t follow links from suspicious emails or download unfamiliar .exe’s. It wasn’t always that way — we had to learn. And we did.
Meanwhile, the most skeptical among us lose no money. With each ICO, every individual can judge for themselves whether they want to invest, and suffer the consequence of their decision. Isn’t that the point of a free market?
Some bad ideas will fail, even as their founders gain wealth at the expense of their investors. But at the same time, some good ideas will surface. They’ll gain momentum, and funding, and be executed by a competent team. As the shoddy ICOs fail, innovative ones will flourish. We live in a new age of unprecedentedly low barriers to entry into the economy. For the first time in history, a programmer — regardless of economic status or geopolitical context — can raise funds for a project he believes in.
And in this environment of both good and bad ideas, we’ll start to learn how to pick them. Ideas will evolve in the context of an increasingly discerning community. The ICO craze is the doorway into a very exciting world: one in which business ideas fail or succeed on their own merit, independent and outside of the old system of gatekeepers.