by Helen Disney, the Founder of Unblocked Events, a hub for blockchain events, education and interviews
Initial Coin Offerings are a type of crowdfunding based on issuing a digital token to investors in the form of a cryptocurrency. Later on, this token may be exchanged for other cryptocurrencies like bitcoin or ether. Some companies prefer to use the description ‘token sale’ or ‘token generation event’ due to uncertainty around financial regulations. Whatever you call them, though, the launch of tokens became a huge phenomenon in 2017. The ICO listing website Coin Schedule counted as many as 235 ICOs in 2017 raising over $3.7 billion.
But how can we determine what makes a good or a bad Initial Coin Offering? And is it any different from ranking any other startup? Increasingly investors are enticed by the potentially huge returns to be made by taking part but how can they judge what makes a particular token worth taking a risk on? All ICOs are very speculative investments and even more so since the regulatory and legal position surrounding ICOs is still so unclear.
Nevertheless, a data marketplace is beginning to emerge in which a variety of new companies are attempting to rank or rate ICOs and create metrics for evaluating their potential.
To take one example, ICO bench provides ICO rankings from industry investors and experts. It also provides statistics and research on the growth of ICOs by country, industry sector, amounts raised and other metrics. It is currently developing a bot called Benchy. You can talk to her (yes, Benchy is a she) about ICOs you are interested in and she can and the team behind the token sale, show you legal reviews and statistics on your return on investment.
Meanwhile, Singapore-based Zilla is launching a mobile app, which aims to make ICOs easier to understand and evaluate.
In addition to helping ICOs themselves to attract publicity and additional interest from investors, the platform provides an indicator next to the title of projects that are projected to have the best performance. The ranking is based on consumer sentiment data, as well as in-app behaviour combined with machine learning.
A data marketplace is beginning to emerge in which a variety of new companies are attempting to rank or rate ICOs and create metrics for evaluating their potential.
Non-for-pro ts are also entering the game with the goal of promoting best practices. The Washington DC-Based Chamber of Digital Commerce, a blockchain trade association, has recently launched the Token Alliance to teach policymakers and other opinion formers about the world of digital assets and token sales and try to shape the regulatory environment.
The new wealth of information now available shows not only that the token sale marketplace is maturing but also that with so many ICOs out there, investors’ time and money is limited. Quality projects now need to invest in rising to the top of the pile both by grabbing investors’ attention and meeting expectations once they are more closely scrutinised.
It turns out that the failure rate of ICOs is indeed similar to the failure rate of startups in general so much of the current hype over certain projects will be in vain. Providing data and information can certainly help investors make more informed decisions but ultimately a huge element of chance remains – and for many perhaps that’s half the attraction.