Between 2014 and 2016, ICOs raised just $295 million, a mere fraction of the total investment raised by start-up computer companies. 2017, however, has seen ICOs come of age, with $2 billion raised already this year. That amount is likely to be closer to the $3 billion mark given some of the exciting ICOs coming out before year’s end.
To put that in context, ICO investment has now surpassed early investment from venture capital funds.
This growth shows the attraction of ICOs to SMEs (Small and Medium Enterprises). They are an unregulated method of raising funds for a company or project, which give it a lot of advantages over standard means of raising capital.
However, like anything, with pros tend to come cons and that’s no different with ICOs. The lack of regulation attracts scam artists in the form of ‘pump and dump’ ICOs. Putting up an impressive front of a company, only for investors to later find that it was just that, a front, and had nothing behind it.
Simple due diligence can help investors avoid these scam ICOs. An advisable approach when researching an ICO is to look at the team behind the project. Lots of up and coming ICOs use advisors from other cryptocurrency projects that are already in motion. This does not guarantee the legitimacy of a company, but it does significantly increase the probability that the project is real.
As shown by the infographic put together by Coinlist.me, there are lots of notable points in the history of ICOs. With records continuously being broken for the most raised in the shortest period, the process looks to be booming but I would be surprised to see its trajectory continue at the rate it is currently.
Like all markets, there is always an enthusiastic phase and I would suggest that is where we are at the moment. This implies a slowdown but not a reversal in trend, especially when you consider that the amount of new coins that are being created is still increasing. This is mainly down to the fact that it is such an easy way to raise funds.
Companies are spending lots of money advertising their ICOs, and even bringing in celebrities to appeal to the masses. The fact that anyone can get involved in an ICO shows the reach that these ICO companies can target – literally everyone!
With China calling a halt to all ICOs, the amount raised in October is currently subdued but there are murmurings that this could be short lived, which again would throw more impetus into the market.
Currently Tezos stands as the ICO that has raised the most funds during its ICO, raising $232 million, whilst Filecoin has raised the most in total, raising $205 million via ICO and a further $52 million from venture capital firms.
Given the growth in investment we have experienced, similarities can be drawn to the football transfer market where the record player sale doubled the existing record. Do not be surprised if we see this kind of leap in ICO investment, which gets us closer to the half a billion-dollar mark. If it is a bubble, bubbles can last for decades. Ride it while it lasts.
For more information on ICOs and cryptocurrencies, visit the source of this infographic at Coinlist.me.
Last modified: May 20, 2020 9:48 PM UTC