When celebrities started endorsing ICOs, it became obvious that the insinuated bubble was about bursting. Many observers wondered how long it would take for the disorder to cause an implosion of the ecosystem. Thankfully, the market seemed to have adjusted on its own, but not without external influences, such as the ban of Initial Coin Offering in some far east countries and the intervention of some regulatory bodies such as the SEC, which made it clear that ICOs may be securities, and that companies involved in token sales may be breaking the law if they are not licensed to do so.
The foregoing probably are instrumental to the slowdown the market experienced in November. Nevertheless, that has not reduced the number of potential ICOs in the works. What really has happened is that companies are finding it more and more difficult to reach their fundraising targets. This is probably because of the sheer numbers of Initial Coin Offerings being launched without consideration of the fact that there are limited investor funds flowing into the system.
Another issue that shouldn’t be overlooked is the fact that investors have realized that there is no certainty of automatic profit by investing in tokens. With the failure of more crowdsales, the investors are wiser with the realization that their money could be lost to scammers who have had a field day due to no inbuilt checks in the system or even seemingly legal companies who successfully launch but encounter post-ICO problems.
Companies such as Tezos and Filecon, despite having had good runs with their crowdsale have not been able to issue tokens to investors despite having met and exceeded their targets. Tezos, for instance, has been embroiled in class action lawsuits after a management crisis that threatened the corporate existence of the firms involved in the ICO. Issues such as this have shown the fault lines in the ecosystem in which companies are entrusted with investor funds despite mostly haven’t had even an alpha version of their products. That a company is still in its early stage means that there still are hurdles meant to be surmounted and that it needs a lot of focus and discipline to be qualified to be entrusted with investor funds.
2017 can well be regarded as the year ICOs came on mainstream tallying more than $4 billion most of which was generated between the second quarter and October. October was the peak of earnings for Initial Coin Offering before the slow down. The period of lull coincided with stepped-up activities by the Securities and Exchange Commission, which intervened through its Cyber Monitoring Unit and stopped a company’s ICO sale as well as filed charges against founders of another for breach of securities law.
Insomuch that these may have contributed to the slowdown in the frenzy associated with ICO in the previous months, one shouldn’t discountenance the fact that the proliferation of startups may have made the selection of the right tokens very challenging for investors. October, the ICO peak month brought in $828 million while November generated just $682 million. This doesn’t imply that fewer companies launched in November, rather there seemed to have been investor apathy either due to some of the reasons previously mentioned or the difficulty in selection of the good tokens.
June may have been the golden month of Initial Coin Offering as all but one of the crowdsale launched by companies in that month reached 75 percent target. But subsequently, it got harder as 59 percent were unable to meet that target in the next couple of months. It is obvious that the number of ICOs rose faster than investors are able to fill them, compounding this is the fact that most of those crowdsales were not backed by value. This is one of the challenges that investors and the ecosystem must remedy in 2018. With all the merits and demerits of ICO, experts in the field are of the opinion that its weaknesses are mainly internal. This is why there have been calls for internal regulatory activities to minify the effect of governmental regulations.
In 2018, we are likely to see some of these internal as well as external regulations take shape. These would ensure that only credible companies whose tokens are backed by value are allowed access to crowdfunding. One of such companies to watch out for is Horizon Telecommunications. The very first telecom company to launch an ICO. Horizon plans to raise $30 million through the sale of tokens, funds which they intend to use in the deployment and rollout of cutting-edge telecommunications services for the Caribbeans.
Information passed on to Cyber Reporters by the President and CEO of the company, Mr. Gilbert Darrell says that Horizon Telecommunications token (HRZN) is meant to give investors value for their investment, “We are reserving 15 percent of quarterly profits for dividends, paying the USD equivalent to the token holders in ETH. 5 percent of quarterly profits will be used for buying back tokens.”
Granted, the price of Bitcoin is going to be a strong factor in the success of most ICOs in 2018 as the trend is that bullishness of BTC is a disincentive for investment in crypto startups. Holders of the coin are already assured of profit when Bitcoin rallies. This is why we are likely to see ICOs offering real values to investors, especially by Q2 of 2018. Investors are enthusiastic for the project launch of such companies whose token would ensure that their investments are worthwhile.