An attempt in prediction
ICO, as a funding method of innovative (and not so innovative :) products, is experiencing exponential growth these days, but where will it lead?
In July of 2017, $574.5 million were raised through ICOs, crossing the record of $462 million established in June (https://www.coindesk.com/ico-tracker). August is set to beat the last record in number of ICOs completed, number of ICOs started and a total raised amount. The whole ICO market is at its highest level of hype, where people who were far away from blockchain and cryptocurrency just a month ago, proudly call themselves investors or are trying to jump onto the ICO wagon with their projects.
The level of hype and obvious overpricing of some projects brought a lot of scammers, hackers and low qualified workforce who are spending a huge amount of time to distort the market. Daily we see ICOs being hacked and the bitcointalk.org forum is full of people busy promoting random, sometimes even obviously fake, projects.
So, what may happen with the ICO market next?
- Positive scenario — Market Matures: Things will continue to be as they are now, slowly improving over time. The ecosystem will mature, with more and more standards being established by all market players. These standards would become effective to differentiate scams from real projects, and they wouldn’t just be taking a marketing budget into account. Regulations enforced would be reasonable and would not prevent many from investing, while protecting their interests at the same time. Growth would continue, and more and more companies would finance their product through ICO. While all of this is possible, when looking at the current market situation, we believe chances for this scenario are quite low.
- Neutral Scenario — Market Crash: While for many a market crash is not a good thing, this might be exactly the thing needed to help clean up the ICO space and make it more fair, clear and reasonable. At some moment, when one of these “huge valuation” ICO coins is completely dumped investors would start to re-evaluate their positions, causing a domino effect for multiple coins. In this case, the ICOs would return to collecting much lower sums, as it were a few months ago. The market would be cleaned up and a few years later it would return in a more organized fashion. Such a crash is possible, but is not very likely. The growth of interest to cryptocurrencies happening around the world brings new uneducated investors and a constant influx of money will not give the market a chance to clean itself up until the money stops flowing in. In this scenario, the later the fall happens, the longer it will take for technology to recover trust and return in better shape.
- Negative scenario — Competition of Marketing Budgets: As the ICO market gets more and more attention from all of the players, it would become quite a crowded space. The daily number of ICO projects would be too much for a regular person to digest, and the success of ICO will mostly depend on a marketing budget investment. Higher marketing budgets wouldn’t protect from scam projects, they will just improve in quality. Most of the investors wouldn’t be seeing a lot of return on their dollar, but an ongoing influx of new participants and hype would eventually convert the ICO ecosystem into something completely different. Eventually the budget to raise money on ICO for a product would be pretty comparable with the amount of money raised, closing the possibility for a talented tech team to raise money for their really innovative products.
Unfortunately, it seems that the market is following negative scenario. The total cost of “regular” publishing on multiple ICO trackers (we have a list of around 50) is somewhere near $30K, and “premium” placement on multiple trackers can easily eat a $100K USD budget. Bitcointalk.org is full of offers to push your topic to the top for a half of BTC per week, completely ruining the logic of forum. This is still somewhat acceptable for now, but as prices grow, it will cease to make sense. For projects where the main expense is software development (and we see plenty of these doing ICOs), investing money into the actual product would be a much better deal.
We at Dogezer offer a different approach to innovative startups. We think if an idea is great, and leadership is strong and consistent, it is much easier to convince a small number of people to work on a product for a share in that product’s revenue, than to convince a wide auditorium of investors to invest. The project owner would need to convince the team that the product is viable even if he has funds, so why not skip the investment part and make your team members your investors! Why not allow those who care most about the project, those who invest their time, labor and talent, be the ones rewarded when the project turns into something great!
Dogezer would power the “investment through labor” concept by providing a complete set of tools needed to run a virtual software development company. By tightly integrating these tools with a financial system that operates with a project specific coin, we will ensure that project owners can gradually emit these coin payments to team members, implement and sell the product and reward contributors based on the number of coins they own. We believe this approach is going to replace ICO for a significant number of software development projects.
In upcoming topics we are going to talk about our product from the perspective of individual contributors, our unique Token model, and do a bit of comparison with our competitors.
Dogezer preITO is going to start September 1st, 2017, at 13:00 UTC. Please visit https://dogezer.com , checkout our whitepaper and subscribe to our mail list to stay updated.
The Dogezer team is happy to answer any questions: