Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Startling details released about the last year’s ICO scenario shows that it has swallowed more of investors money rather than really appreciating their money.
The unprecedented rate of returns given by the cryptocurrency markets in the past few years has attracted several global investors to park huge sums of money in a big to take away a huge moolah in return. Initial Coin Offerings (ICOs) that were earlier a big hit in the first half of 2017, later lost the momentum of attracting credible investors as many fraudulent schemes came to the surface.
Earlier this year, Ernst and Young released a report showing the dark side of the ICO. Ernst and Young in its report mentioned that around $400 million USD worth funds have either been stolen or completely lost in case of fraudulent ICO schemes. E&Y also mentions that there were many such lucrative ICO investing proposals which only existed up to having mere websites and never proceeded further in terms of project implementation.
In yet another startling revelations, Bitcoin.com in its extensive study for last years crowd sales found out that nearly 46% of ICOs launched last year are now already dead. Also, one of the most comprehensive ICO tracker – TokenData – has also released a list of 902 crowd sales which took place last year. Out of this, 142 are said to have completely failed at the funding stage while a further 276 have failed either due to either by slowly running to obscurity or running away while taking the investor money.
Moreover, there are a few ICOs around 113 which have been classified as “semi-failed” either because their team has stopped communicating through different channels or their community has been very small and thus has not been able to make enough progress for the project to come to life. This further takes the total figure at 59% of total ICO projects which include the totally failed ones as well as the ones on the verge of failing.
Bitcoin dot com mentions the ICO market of the last year as a “digital graveyard” that majorly comprises of some fake promises made by companies which now have “Abandoned Twitter accounts, empty Telegram groups, websites no longer hosted, and communities no longer tended are par for the course.”
Many financial analysts have previously warned investors several times to thoroughly check the authenticity of ICO schemes while putting their money in them. Moreover, the thing with ICO markets is that they are completely unregulated and decentralized and hence till now they were not under the ambit of government agencies who can help identify frauds or have a control over them.
However, this doesn’t mean that it will be the end of ICO markets in the near future. Many tech giants like Facebook and Telegram are looking to move towards the decentralized network that offers distributed ownership of content and details to the users, rather than one platform controlling them.
Popular messaging app Telegram is already said to have had raised $1.6 billion in its pre-sale offer. However, many professional and financial analysts have also expressed concerns over the Telegram ICO stating that the company has released very skew technical details of its project or the roadmap and has been only cashing on its image till now.