DECENT 101: Are ICO and Blockchain Scams Dead?

Published in
5 min readJul 19, 2019


The word “scam” gets tossed around a lot in the crypto space. One can argue that it’s significantly due to the fact that ICO scams have become an infamous stain on the industry.

In this episode of DECENT 101, we dive into the malicious practices of many blockchain companies, what investors and legitimate cryptocurrency-offering companies are doing to fight back, and how all that can impact you. Hopefully, you’ll find this timely, as new projects start fundraising again.

First, Some Buzzwords

For those who don’t know, ICO stands for “Initial Coin Offering.” This is a blockchain company’s way of offering a means for the public to invest in them through their own cryptocurrency. This unequivocally leads us to the word “scam” and how different its meaning is nowadays compared to what it used to be. What most people mean when they use the word “scam” related to cryptocurrencies today is usually tied with them losing their investments.

But blockchain isn’t a business centered around return on investment-nor should it be.

Silicon Valley startups follow the ‘move-fast-and-break-things’ philosophy. In the pursuit of technological innovation, mistakes are bound to happen, and this costs some investors money. Every industry has gone through this, dating all the way back to the PC age during the 1960s, and, once again, during the internet bubble of the late ‘90s.

The early blockchain adopters didn’t create the term ICO; those were the institutional investors who only came later. The first blockchain projects were often sourced through crowdfunding. The most famous example is Ethereum. A lot of people know about the Ethereum coin, but only a few are aware that the company behind it was originally crowdfunded through Bitcoin.

ICO fundraising was a way to promote decentralization and bring power to the people. It also helped maintain the transparency of the funding behind each project. ICOs used to be about innovation-today, they’re all about marketing.

A History of Crypto Scams

Scams are toxic for the blockchain industry and must be stopped. It’s also important, on the other hand, to clarify that scams did, at one point, consider situations other than stealing money.

The first “scams” in blockchain can be dated back to altcoins in 2013. Litecoin, especially, ended up modeling their business very differently than what they had told their original investors.

Their pitch was supposed to be an ASIC-resistant alternative to Bitcoin that would prove the archetypal coin’s gumption worthless. This was an ambitious plan, and, unfortunately, they couldn’t make it happen. This may come as a surprise, but Litecoin is still around to this day and still holds its price around on the market. Does that make them a scam just because they ended up with a different product than they had sold investors on? Debatable.

What makes matters worse, however, is that there have been other companies with cutting-edge ideas that simply shut down and their investors lost everything. Aurora Coin-a coin intended to be given to every citizen of Iceland-once had a per-coin market value of over at its peak. Today, it has crashed into the graves of the forgotten. Ask everyone at your next crypto conference and they’ll tell you the exact same thing.

Nowadays, people spend too much of their time trying to figure out which ICOs are scams and which are legitimately trying to push the boundaries of blockchain technology.

When Ethereum started providing investors with 100+ times return on investment, the whole world began to pay attention to cryptocurrency. These previously unimaginable figures drew the attention of private equity and institutional investors. These new investors in the industry started to draw attention away from innovation (which proved to be detrimental to innovation as such) and made profiting on cryptocurrencies the main focus for most of those catching onto blockchain.

What resulted was a catch-22. The more investors poured in, the more companies focused on an ICO token sale to profit for doing basically nothing. The more companies were created, the more attention was drawn to this space-attracting more and more investors. And so the cycle repeats.

Will ICO companies persevere?

Today’s hype won’t last forever. The original wave of companies who raised money through an ICO started in late 2016/early 2017. The average development time of a good blockchain can take up to three or more years. This means that we will see the initial results of a lot of these companies between 2019 and 2020. If the majority of these first-wave companies cannot show concrete results in a year or two, the market will react accordingly.

This doesn’t mean there’s no future for ICO or blockchain companies, though. It’s a natural cycle-just like the Internet bubble burst in the late ’90s and then the truly innovative giants like Amazon, Microsoft, Google, and Apple, which became the top companies in the world.

The blockchain industry could just be starting to see the companies that will define our next decade.

So which one do you pick? Which blockchain company will stick by its cutting-edge idea and surpass the rest of the industry? Which will pivot from a bad idea and come out just as good as Litecoin? Which will dissolve like Aurora Coin or other rogue companies?

The good thing about blockchain companies is that most of them are still small. If you want to think like an investor, teams are often cited as the single most important aspect when trying to determine the future success of a venture. Blockchain is still a community-driven industry-so, try and reach out.

While the people in a company are one of the best indicators for future success, the company’s intentions and results are a huge factor, as well. Many of these companies have YouTube videos , social media , and websites . If you were in the shoes of the business or customer they are selling their technology to, would you buy it? Do they value long term innovation or do they sacrifice it for short term profits? Do you regularly check out what other industry experts think of these companies?

Those who bet on the Internet in the ’90s caught themselves up in one of the greatest opportunities in our history. With blockchain, we have another such chance.

We hope you liked the fifth episode of our educational DECENT 101 series. As always, reach out to us on social media channels or join us on Telegram to speak directly to a team member, and we’ll be glad to help you with any inquiries you may have.

Originally published at on July 19, 2019.




Providing a fast, powerful and customizable blockchain to help you easily build decentralized applications, Block by Block.