It has always been assumed that a large number of ICOs will fail, be it at the fundraising stage or when it comes to delivering the actual project. It’s hard to settle on a precise figure, however, as most dubious ICOs don’t exit scam: they slowly tiptoe away, like a sneak thief rather than a smash-and-grab robber. Having completed an extensive study into last year’s crowdsales, news.Bitcoin.com can report that 46% of them are effectively dead already – despite raising over $104 million.
ICOs Are Even Riskier Than You Think
Given enough time, everything withers and dies, from the most robust institutions to the most popular crowdsales. No one expected all of 2017’s ICOs to last the course. The pace at which they’ve withered and died may come as a surprise though. Tokendata, one of the more comprehensive ICO trackers, lists 902 crowdsales which took place last year. Of these, 142 failed at the funding stage and a further 276 have since failed, either due to taking the money and running, or slowly fading into obscurity. This means that 46% of last year’s ICOs have already failed.
The number of ICOs that are still a going concern is actually even lower. An additional 113 ICOs can be classified as “semi-failed”, either because their team has stopped communicating on social media, or because their community is so small as to mean the project has no chance of success. This means that 59% of last year’s crowdsales are either confirmed failures or failures-in-the-making.
A Digital Graveyard of Broken Promises
Trawling through 900 ICOs in one sitting is a deeply depressing experience, news.Bitcoin.com can report. Abandoned Twitter accounts, empty Telegram groups, websites no longer hosted, and communities no longer tended are par for the course. A digital graveyard, complete with metaphorical tumbleweed, characterizes the crop of 2017 that decided to take the money and run. Many raised zero; some raised a couple of thousand dollars; and a handful raised over $10 million. In each case, the end result was the same though: no MVP, no alpha release, and no contribution to the decentralized web for the betterment of humanity.
Many of the dead ICOs were doomed from the start. It will come as no surprise to learn that projects such as Clitcoin, Neverdie, and Zero Traffic didn’t make it. (Update: Neverdie has since been in touch to claim that reports of its demise are premature.) Some, which fell flat at the fundraising stage, are doing it all over again this year and hoping that 2017’s failure can be written off as a trial run. Freight trucking platform Doft is one such example. Looking at the countries of origin for failed ICOs shows that developing nations – and an entire continent in the case of Africa – are over-represented. Nevertheless, every major country and continent features in the list of shame.
Many of the 531 ICOs that have failed or are failing from last year looked sketchy from the very start. In most cases, investors were able to spot the signs and steer clear. Not everyone escaped unscathed though: these projects still raised $233 million between them. With ICO mania showing no signs of abating, there’s no reason to expect this year’s crowdsales to fare any better. Thanks to diminished returns, increased competition, and a never-ending stream of opportunistic ICOs, crypto investing in 2018 is riskier than ever.