Research: ICOs Raised over $12 Billion in First Half of 2018

Citing data harvested by Autonomous Research, a financial research company, Bloomberg reported on August 2, 2018, that ICOs attracted a record $12 billion in the first half of 2018. That is approximately twice the corresponding figure from all of 2017  considering the data provided by Autonomous Research only includes ICOs which raised more than $1 million.

Big Numbers, Questionable Improvement

Interestingly, this growth spree continued even as bitcoin was hitting one bump after another and lost nearly three-quarters of its value from December 2017.

But the million dollar question is — do these figures reflect any significant improvement for the ICO industry as a whole?

To conclude those lines would be somewhat questionable. Considering that the bulk of the investment drawn by ICOs in the first half of 2018 went to two projects: EOS, a platform aimed at open-source projects, and Telegram, an instant messaging service.

(Source: Bloomberg)

Still a High-Risk Sector

An ICO is primarily a fundraising technique wherein new projects sell their crypto tokens in exchange for fiat currencies such as the US Dollar, or other cryptocurrencies like bitcoin and ethereum. The concept is pretty similar to that of an Initial Public Offering (IPO) where publicly listed companies offer their shares for sale to investors.

While the growth of the ICO industry against all the odds is indeed commendable, it continues to remain a high-risk sector for the sheer reason that the vast majority of ICO projects eventually bite the dust, leaving the onus for course correction to a few highly successful ones.

Based on records, a large proportion of all ICOs are fraudulent, which is why governments across the world are trying to rein in on the industry by introducing stricter regulations.

It is the Pareto Principle all over again: 20 percent of efforts yield 80 percent of results, whereas the other 80 percent of efforts return just 20 percent of results.

It is possible that the stellar performance of bitcoin and other cryptocurrencies in 2017 is still driving many crypto bulls into new ICO projects. Many of them are optimistic that the high returns realized by ICOs in 2017 will repeat in 2018 as well. This is possibly the biggest factor that has kept the industry up and running better than at any time in the past.

However, according to Autonomous Research’s global director of FinTech strategy, Lex Sokolin, this optimism might just fall flat on its face. He added: 

“This is a high-risk sector; it is early-stage tech and lots of it by definition is going to die.”