Evaluating ICOs on the basis of being a means of raising capital gives us another perspective to the state of the ICO market. That ICO is undergoing an evolution into other forms of ICO in a bid to adapt to the changing market conditions. For instance, ICO is evolving into STOs to help meet the changing security and regulatory environment in the market while evolution into IEO is to help deal with credibility.
- An objective assessment would reveal that ICO was a great tool, still convenient for all stakeholders, helping even small investors access investment opportunities that would never have come their way. If ICO is just evolving into other forms that fit the needs and challenges in the crypto-world, then it would be safe to say that ICO still has a life in the market.
What investors and project leaders should do
Every phase of evolution presents new opportunities and new challenges. This calls for understanding of each phase and diligence on the part of both the investor and project leaders. There is need to maximize on the opportunities that were in the last phase of evolution so that you carry them into the new phase.
Additionally, look for the pain points both in the past and present phase and work around them to bring out a great investor experience. Take for instance the said ICO evolution into STOs; while STO meets the security and regulatory risk, it presents very high market entry requirements that lock out the small to medium investors.
ICO major downfall theory
ICO has had a major downfall; from $6 billion to $346 million in similar comparison periods. We fall to rise again. The first step to rising is to accept the fall, look back, learn lessons and change strategy. Here are points to consider that could have caused the down fall.
1. Clean the scams; build integrity, transparency
By March 2019, analysts started sounding the alarm that more than 80% of the ICOs were nothing but scams wrapped in blockchain mystery. Well, there is a great possibility not all were scams, but it is the one rotten apple that spoils the whole barrel! Investors need to be diligent with their research and statistics, and not lazily rely on any figure they come across; this will help them separate a scam from a true business and therefore cushion them from losing their money to scams. Thankfully the industry can self-regulate through the use of smart contracts and escrows.
2. Invest in Sound business planning
A number of the ICO projects did not have strong business plans and clarity of vision; they had colorful white papers. The ideas were great, promising but without a keen plan on implementation, measurement, reviewing and strategy even the best of the best was bound to fail.
3. Security and regulation
It is true that regulations, particularly from SEC, have weighed in heavily on ICOs. An acknowledged barrier to positive progress is clearly lawmaker education; most lawmakers are not opposed to ICOs, they are just unfamiliar with it.
Here is a quote from Congressman Warren Davidson while seeking inputs from the crypto-industry.
- “Your input is critical to helping us preempt a heavy-handed regulatory approach that could stall innovation and kill the U.S. ICO market,…With a thoughtful, bipartisan approach that protects consumers, advances free-market solutions and defines safe-harbors for the early stage innovators, Congress can send a powerful message around the world that the U.S. is the best destination for ICO markets.”
4. ICO data challenges.
There is the challenge of subjective matrices that are used for data collection and inclusion. And while blockchain data is immutable, the quality of data may be interfered with by scams; the interpretation and use of this data are prone to manipulation, and misinterpretation to fit desired ends.
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