Now that we’re in the final month of 2018, a question looms over the blockchain community: are ICOs dead? With the crypto market taking a hit, it’s legitimate to question the future of blockchain fundraising. Clients often ask me for my “cryptocurrency predictions 2019 edition.” What will happen with the market? How much can I raise? How will it affect my projects? These are common questions I’ve been getting lately.
Are ICOs dead?
2017 was the year of the ICO. Hands down. No contest. However, the interesting part is that this happened for the wrong reasons. Very similar to the early dot-com bubble, the cryptocurrency market went through a mad bull run. As a result, many were overly enthusiastic about blockchain technology and its limitless potential.
Projects with a simple website and shoddy whitepaper could suddenly raise millions by selling a token. Some blockchain startups were clearly over-valued. Things were going very fast. Legal and regulatory frameworks were unclear if not totally lacking in most countries. Of course, a lack of oversight led to rampant abuse.
In 2018, the world became more aware of the problems related to token sales. Despite the negative sentiment in the market, some countries such as Malta or Gibraltar developed friendly regulatory policies regarding cryptocurrencies similar to what Switzerland had done years before.
In contrast, US regulatory body, the SEC became more aggressive and has publicly prosecuted some ICOs for selling unregistered securities. The crypto market saw rapid growth, but it will have to adapt.
Is starting an ICO in 2019 worth it?
Many entrepreneurs are keen to know what cryptocurrency predictions 2019 holds. Does it even make sense to start an ICO in 2019? That’s fair considering the current bear market. Early adopters of this technology know that the price of bitcoin has already dropped more than eight times and are not worried about the slump. Meanwhile, a majority of token holders are young and inexperienced investors for the most part.
A bear market is not a disaster, there is no blood on the streets. Are ICOs dead? Far from it. The current situation is a reality check that only means one thing — Keep calm and focus on a market need. Create a product that people will use and don’t speculate.
Lack of product development
According to the figures reported by CoinGecko, 50% of the ICOs organized during the Q3 2018 failed to complete their goal. If the “cold” state of the market is probably the main reason, the lack of product development has an important role in this decrease. But are ICOs dead yet?
As of Q3 2018, the average amount raised was $8.2 million per ICO and the global amount currently raised for 2018 is $13.7 billion. Funding is still there for the right projects.
Even more important than the product itself, a team of people that have hands-on experience in the industry you are targeting is a must have. Gathering the right team and not spending money on influencers, who don’t bring any concrete value to the project will help you tremendously. Don’t cut the expenses from the product and tech development to the profit of the marketing expenses. In the long run, it’s really not worth it.
Try to be genuine. Avoid the traditional airdrops that are only building an illusion of community and engagement around your product. Instead, focus on your brand strategy, customer acquisition, and retention plan. Lastly, don’t be afraid to ask for advice to VCs and take into account their views in order to improve your product.
Cryptocurrency predictions 2019
At the World-Wide Developers Conference in 1997, Steve Jobs said: “You have to start with the customer experience and work backward to the technology. You can’t start with the technology and try to figure out where you’re going to try to sell it.”
Unfortunately, many blockchain projects did the opposite. They took a traditional business and just tried to force a blockchain somewhere. The current bear market has led many people in the industry to question the future of blockchain. According to some cryptocurrency predictions 2019 will be the end. Are some ICOs dead? Yes — but any business that fails to address a market need eventually fails.
Cryptocurrency — especially in the form of tokenized assets — is here to stay. Of course, only for the right projects. Finance, real estate investment, and supply chain management are promising avenues. Blockchain helps to develop new paradigms. But it takes time to create solutions that will lead to mass adoption, and answer market needs. A successful ICO is not an ICO that raises $50 million. A successful ICO is one that creates a genuine community around the project in terms of investors but also in terms of engaged users.
Sometimes, raising money through an ICO is not even necessary to launch a blockchain project. In this case, there is a direct peg between the product and the token. One recent project, Numerai, released their Numeraire tokens. These tokens incentivize the construction of an artificial intelligence hedge fund through private investment.
Moreover, the project is evolving every day and includes more than 19,000 scientists in their network. At the top of their market capitalization, Numerai had more than $200 million. This proves that a good project can be financed by other means than by ICO fundraising schemes.
Many opportunities in the blockchain industry have yet to be applied at all. As a matter of fact, we can mention the Non-Fungible Tokens called NFT, the tokenization of assets and of course, security token offerings (STO). All those paradigms are there, waiting to be used.
So are ICOs dead? My verdict is no. My cryptocurrency predictions 2019 edition are that the industry will only adapt to new challenges and provide real value to the community of investors.