Is the ICO market developed or marginal?

ICO operations are multiplying around the world, especially in the United States. There were 50 in 2016. According to Smith & Crown, in 2018, 13.5 billion were collected by this means for 581 operations. In 2019, we would rather speak of 2.8 billion raised at the end of October for 182 operations.

Fundraising can be spectacular. EOS, a blockchain protocol, raised $4 billion on its own in 1 year. Brave, a web browser founded by one of the creators of Mozilla, raised $35 million in 30 seconds in 2017. The Telegram (TON) blockchain raised $1.7 billion.

Even if the figures can make you dizzy, the result is not there. At least not at the moment. According to a study by the firm EY sifting through 141 of the main ICOs of 2017, 86% of tokens are worth less than their issue price. 30% have even lost almost all their value. Gains are concentrated on the ten biggest ICOs of the year.

What future for Initial Coin Offerings?

It is difficult to predict the evolution of such a sector. However, it is not excluded that it will structure itself soon, in particular thanks to the visas granted by the AMF and the new status of the service provider on digital assets (PSAN).

Nevertheless, the major limit of ICOs is that they remain dedicated to financing projects based on “utility tokens”, excluding any recourse to financial securities. At the same time, “Security Token Offerings” or STOs, which concern the issuance of financial securities via the blockchain, are becoming more frequent. But these are subject to the same legislation as the issuance of traditional financial securities.

Another obstacle to the development of ICOs is that crypto-assets can only be purchased with crypto-currencies. Currencies that currently have no legal status are not recognized by states and therefore do not have legal tender. To organize this market, it would be necessary to witness the emergence of an official crypto-currency and, above all, non-speculative and anchored in the economy.

 Again, things are changing fast, and one of these currencies will likely emerge in the coming years. Facebook’s Libra project has caused a lot of ink to spill with its aim to become a “stablecoin”, that is to say, a currency pegged to an official course represented by a basket of state currencies. The emergence of a private currency is not without raising serious questions for States, which could even engage in creating an official crypto-currency.

What to pay attention to when investing in an ICOproject?

The starting point for investment would be to peruse the ICO calendar and see the offers. If some project raises your interest, there are several things to pay attention to. You need to go to the official website of a certain ICO if this has one and check the team behind the project. Do the team members have social media accounts on Linkedin, Twitter etc. Check if the members all have decent experience in blockchain technology development. Then, make sure to check the white paper, which is full of all relevant information about the product or service the ICO project is supporting. 

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