Yet the remedy proposed by regulators can actually kill the patient.
Our London correspondent Nick Ayton aka The Sage of Shoreditch, after chairing Blockchain Expo in the heart of Silicon Valley, assess the state of ICOs and the short-term prognosis suggests that in 75% of case we lose the patient.
12,000 people attended Blockchain Expo in Silicon Valley on November 29 and 30. 2017, to date one of the largest gatherings of crypto enthusiasts, which has provided a sizeable sample of people in the ecosystem to measure the current temperature of ICOs as an emerging capital market.
a period of intensive care, but should appear more fit and stronger in the second half of 2018.
doctor calling BIT (beat)
There are several factors which affect the health of the patient which are inflicted by the many ills of the founding teams who suffer from very similar symptoms: poor listening skills, illusion and over-ambition. The main problem comes from the fact that the founders remain in total denial of current laws and regulations because they are in Blockchain now.
There is a dangerous trend with the founders pushing on it, relying on tiny legal advice and where, in some cases, law firms have naively followed Howie's test and concluded that the "token" is a token of utility. Ignoring crowdfunding, banking, and ignorance, they create unregulated financial products where the token is clearly designed as a pooling tool, for the sole purpose of raising funds for a project.
Change of direction of the market
We see the end of Bootstrap projects replaced by business people who see the light ICO that comes with established businesses, real customers and customers. income. This puts them in a privileged position to be able to afford increasingly expensive ICO processes where costs have more than quadrupled in the last 6 months.
With the announcement of CME and the emergence of OIC platforms that offer security tokens. a regulated governance approach, new crypto funds, emerging ETFs and new exchanges combining the old capital markets with crypto; There is now an "access ramp" for institutional investors, large fortunes and venture capitalists. They think that only a small slice of crypto in their investment portfolio will drive the mundane performance of 99% of funds.
The Bitcoin price spike is therefore not a coincidence since people are starting to wake up and that a lot of money has joined the queue to buy Bitcoin (and Ether) and why the performance of the underlying network in recent weeks has slowed down considerably. At the time of writing, BTC is approaching $ 14,000
The main hurdle to entry is the way country offices are currently being built. Infamous white papers that promise to deliver a lot without any good governance or pressure on the founders to deliver what was so clearly promised. In the next evolution of the ICO process, we will see the White Papers more like an Investment Memorandum and a Prospectus (the intention of the regulators) than a slight commentary that we see today.
Remember that 75% of the projects do not reach the soft ceiling
The volume of projects of the I & # 39; 39; OIC has not declined and every month we will continually see new projects. Hunt fewer OIC investors where the pool of crypto enthusiasts (investors) is not growing at the same rate as the ICO projects. And people hold ETH and BTC.
While the reported number of portfolios downloaded suggests that the number is 30 million, in reality it is both more and less. More portfolios that support social impact programs that are not yet investing, and new portfolio owners who have woken up, buy and hold, and are not investing yet. And popular portfolios such as Coinbase and MEW.
Adoption Rate of Crypto
The crypto market is growing rapidly but not enough to track the number of ICOs.
The biggest factors in ICO's high rate of failure remain the naivety and ignorance of the founders, where they think their project is "crazy" and that all the World wants to be involved with bad advisors and boards, establishing an unusually high Soft Cap. failure and humiliation. ICOs that do not meet the soft cap will be detrimental to adoption as repayments take time and doubt.
Investing in the Air …
Most of the ICOs' fail & # 39; are projects with just one idea because they want to raise funds in the pre-ICO to build the idea and pay for an ICO. They are simply not sufficiently developed and present themselves as such. Ask investors (token buyers) to give them money to develop the concept? Without considering what is there for investors? Or why would they separate from the ETH at 460 dollars in exchange for a token related to a project that is not sufficiently defined? In the past, investors funded the founders' ideas from the initial cryptographic benefits, which in most cases played a game of waiting for the founders to deliver something, no matter what because they are helpless and see their symbolic dump
follows the actual products
The smart money is more and more attracted to projects where there is something to see, a prototype , MVP or in many cases a fairly complete solution that gives the investor confidence that demonstrates the potential gold pot at least … Although some founders believe that the issue of a utility token is sufficient, and expect investors to become interested users of the platform itself
looking for a return, to be able to enter and withdraw money. Different project fans who are happy to buy the chips, or win them and then spend them on the platform to be an integral part of the new ecosystem.
Companies with real incomes, clients and founders tend to meet the needs of new ICO investors and the passage of the crowd to the institution. As the laws of Greshams reinterpreted, the evil money repels the good
Bad Underlying Measures
To assess the readiness of an ICO, it must look at the underlying data that indicate the level of interest of a project. I talk with a lot of founders who have a decent project and think that a few weeks marketing will attract enough listeners to collect millions of dollars. While some projects can, normally pumped by a celebrity, a key management team or an advisor that raises the profile, the majority of projects do not have that chance. Insufficient marketing budgets, mediocre content and being late to the party hurt so many ACIs and reduce the amount raised. Good projects are missing
It takes at least eight to twelve weeks for the story to be broadcast in the investor communities. Ideally, the team should have created a follow-up since the creation of the projects, which led to a lot of social media and to drive traffic to the website and then the ICO website. Require tens of thousands of visits per week that indicated a readiness, to press the Go button of the ICO.
You do not hit your Soft Cap with 500 on the telegram, 100 hits a day, 1000 Twitter followers and broadcasting a bit of content every day. Volume matters and it surprises me when the founders think that from their launch, there will be a frenzy towards their project.
Not giving enough time for PR and marketing to spread is a difficult but common lesson to learn
I am constantly amazed by projects who push forward by tossing a token that is a worry-free security in the world. No KYC or even recognition of the need to find information about the investor or the token buyer.
"My token is not a security" is their answer. Or: "Our attorney, our advisor said it.We pass the Howie test confirming that our token is a Utility Token.In any case we can fill out an exemption form after the event under 506 and that will be enough. "
All good then.
The War Show is the most entertaining when the reality of what the founders did is explained and the situation in which they find themselves becomes clear. Investors will not buy tokens that are securities and are not declared as such, and if they do, residual class actions may result in the collapse of the project.
Want to Reinvent Blockchain, Accept Visa, Solve World Peace and World Famine, and Others Who Want to Launch a Token That Does not Explain the Blockchain underlying and why it is necessary. At this point, the fools have definitely control of the asylum
The trade is closed
The new tokens have no liquidity and exchanges do not take new tokens nowadays. Investors are now aware that liquidity is the key. Stock exchanges that list tokens that are securities will need to rethink their core business as new stock exchanges designed to handle specially designed tokens as securities, as well as to pre-screen investors during secondary market operations and activities. . We should expect some exchanges in 2018 to close or not list new chips.
Discharge of Patient …
The ICOs in their current form can not survive 2018, and the label of "Far West" will be replaced by an ICO process that seems more conventional because regulators cut off mass investor channels, banning or limiting the activity of the ICO, and wanting to know the owners of the portfolios.
In reality, one should not be surprised at the purchase of a token (a financial product) that promises a return, a right, a right to vote and other attributes value-related is likely to attract attention, and will require an appropriate approach to the Investment Memorandum, a Prospectus h commitments, projections and an explanation of the use of funds in milestones, and support investor reporting and governance structures.
Those who pump the token (financial product) PR and Marketing, the team and the founding staff or another third party will not be allowed to promote, sell or market security tokens that are actually like any other financial product.
Is this part of the blueprint for governments and regulators? crowd out the crowd using the excuse of protecting the investor or the conspiracy to protect the banks and capital markets on which their pay packages, future and allegiances depend?
Let's not forget that OICs are not the only secret sauce of Blockchain and Cryptocurrencies.
Blockchain helps us to remove the center. Make things inviolable. Reflects trust that has been removed from businesses since 2008. It is time to build new banks, new payment systems and a new range of financial products, platforms and ways of doing business; and use current rules and regulations to bring down the entire system.
Bitcoin is already a reserve currency for some, a safe haven for others, a protected value. It helps pay for the losses suffered by those who were stolen in 2008 when the regulators withdrew and let things go.
IFAs will mature. They always offer new options. And while the patient needs oxygen, he is not yet written off. Token sales are part of a new capital market, we must show that we can keep our own house in order!