The Methamphetamine of ICOs “Breaking Bad” the Market of Regular Crowdfunding
“Some straight like you, giant stick up his ass, age what, 60? He’s just gonna break bad?”, Jesse had asked, his tone borderline incredulous. His incredulity notwithstanding, Walter White had indeed broken bad, going from being an inconsequential chemistry teacher to a conniving mastermind worth $80 million. Whether one is trying to make a quick buck or get a jumpstart out of the abyss of life, drugs may be the easiest thing to reach for, often spewing results you did not sign up for. Is ICO the new drug of the fintech industry? It would sure seem so, given it has altered how older generations viewed crowdfunding and how it has been propelling investors to a high that is as surreal as it is uncertain.
Last year saw the fintech industry grow by leaps and bounds, increasingly capturing public imagination and interest. ICOs led the upward spiral, becoming the blue meth of crypto’s Heisenbergs with rosy promises of high returns. Like the chemically pure Blue Sky, cryptocurrencies are novel players in the finance market, yielding a different kind of high altogether. 2017 saw ICOs claim their throne as the unique and cost-effective means of raising capital while crowdfunding found itself jostled out of the way, hurtling for the archive of ghosts of millennial trends past.
ICOs have often been seen as something between an IPO and crowdfunding, capitalizing on crowdfunding’s popular appeal, cost-effectiveness and the large pool of investors. It is the chemistry of these factors with IPO’s investment potential that stirs up a heady mix today’s investors can’t seem to get enough of. It is the last component that cooks up all the drama in this pot of meth, with speculators using the investment potential to make crazy speculations about returns. Consequentially, we see more and more proposed ICOs fall under the regulator’s axe with cybersecurity giants like Kaspersky Labs identifying the ever-increasing number of ICO scams. Influencers only fuel the fire of ICOs and keep the pot aflame.
However, understandably, ICOs, the more flamboyant fraternal twin of crowdfunding, has not managed to become the apple of the regulators’ eyes. Despite the regulatory disapproval, ICOs have mushroomed in 2017, raising $3.8 billion while at it. Clearly, the model seems to be working. The advent of ICOs has opened up a whole new way for start ups to raise funds very quickly. Aragon, for example, managed to raise $25 million in just 15 minutes. Since the invested amount allows the investor to purchase tokens that can be traded in the future, it is arguably a more lucrative investment. However, like most drugs, the high can leave behind a bitter aftertaste of ICOs sometimes turning out to be nothing more than a sham. Are the profits reason enough for choosing ICOs over crowdfunding? Only time will tell. However now even if crowdfunding were to echo Walter in saying “Stay out of my territory”, ICOs sure wouldn’t oblige.
