80% of Initial Coin Offerings (ICO) were scams and that’s a good thing!

According to the recent study by New York-based Satis group LLC over 80% of ICOs that raised over $50 million were fraudulent and only 8% actually made it to an exchange. While you might think that these findings undermine the whole ecosystem there’s a lot of parallels to previous tech waves that make me feel quite optimistic. After all, as Mark Twain once said: “History doesn’t repeat itself but it often rhymes”.

The one parallel that comes to mind is the Viacom lawsuit against YouTube back in 2007/8. As part of the proceedings it emerged that over 70% (according to YouTube’s own staffers estimates!) of “most viewed/most discussed/top favorites/top rated” videos infringed some kind of copyright back in 2007. Back then many observers viewed these revelations as proof that YouTube was nothing more than a..(hint, hint): scam. As we all know by now that did not prevent the platform from cleaning up its act (inventing Content ID) and creating a whole new multi-billion dollar market for original YouTube-first content thus creating millions of jobs worldwide in the process.

Similarly, the abrupt bursting of the 2000 Dot Com bubble resulted in over 78% of the NASDAQ composite’s peak value to be wiped out between March 11, 2000 and October 9, 2002. Yet the 2000 crash did not prevent Alibaba, Amazon, Google, Facebook, Netflix and many others in transforming the global economy and creating trillions of shareholder value in the process.

Perhaps the next in line to become yet another reference is the fabulous stable of unicorns (Generally, in reference to VC-backed private start-ups with valuations north of $1 Billion), which by some accounts may be overvalued by 50%. Even if, according to a recent CNBC article 80% may fail we can be more than sure that the 20% which survive will create enough value for the economy (and hopefully society) to overshadow failures along the way.

It is quite fascinating how the 80/20 rule seems to be a fairly accurate guide to our world. I have absolutely no doubt that the #ICO and the #blockchain as a whole will over-deliver on its promises and enable entirely new blue oceans of market opportunity in the long run. The implications of a decentralized Internet of Value are far too great to be derailed by short-sighted opportunists.