ICO stands for initial
coin offering have quickly emerged as a multibillion-dollar industry. Start-up
entrepreneurs often launch ICO as a way to raise capital as quickly as
possible, however, there are evidences that state that the ICO market is about
to cool down. This doesn't mean that the initial coin offering is dying off. As
the industry evolves, the expectancy of the crowd still raises. It is expected
to significantly improve. For example, Buterin, the founder of Ethereum says
that token 2.0 will be of higher quality than ICO.
Here are the reasons why ICO release date is slowing down:
1. Regulation
The major cause of ICO
cooling down is because of China's ban on token sale. The ban has occurred in
early September and have led to a sharp decrease during the month of October. The
ban of ICO have quickly spread to South Korea which has a more relaxed
cryptocurrency regulation. As of right now, ICO continues to operate in a very regulated
manner. A lot of startups are contemplating about what type of token to issue
and where to implement their Crowdrise. Luckily, Europe has offered the best
solution for crowd sale. That is why the region accounts for half of the ICO
funding.
2. New protocol
The development of the
simple agreement for future tokens which stands for SAFT project was created to
self-regulate the industry while navigating the security law in the US. The
SAFT may not be as safe as we have previously thought it would be. A report by
Cardozo blockchain project argued that SAFT could make it more difficult to
provide consumers access to meaningful new technology. If SAFT is the solution,
it will take a while before the industry can adapt to its standard protocol.
3. Investor scrutiny
Investors are more prudent
about ICO than they were a few months ago. The public is determined to seek out
solid cases and business model pertaining to crowd raise. They want more
information regarding the team and all their questions to be answered.
Investors are continuously pouring money into crowdfunding campaigns, but there
are hundreds and thousands of projects launching on a weekly basis that the
standard for the token is rising higher than ever.
4. More scam
One of the reasons why ICO
is cooling off is the increasing number of fake and fraudulent projects. Oftentimes,
scammers will copy the ICO, rewrite it, and launch a website with random
pictures of advisors that they have found online. They will obtain all the
revenues from investors, and shut down the website and leave. The US security
and exchange commission has already charged two ICO of fraud. These regulators
have also warned potential investors to be cautious about false promises and
unrealistic profit from token sales.
Conclusion
