If ICOs could tell us how they feel about the gloomy and bearish crypto market now in 2018, they would probably say, it “is neat, but I’m afraid it’s not very forgiving”. Are ICOs becoming scared of the slumping, dark version of the crypto world they were used to seeing? We’d say they are. Bitcoin and other cryptocurrencies have seen a subversion of their previous good fortune in recent times and the dazzling world they inhabited once has been replaced by the sluggish world in “Upside Down” where potent risks abound and regulators threaten to morph into the predatory Demogorgon at any point. The fall from the situation in early 2017 (around June) when ICOs found their place in the sun, has been rather steep and the period between end of 2017 and the first half of 2018 have seen declining numbers of ICOs.
Of late, the trend of ICOs is being equated with high-risk, hyped up fads. According to Yuri Morozov, the founder of a Russian blockchain start-up Bubbletone, the reason behind the falling volume of ICOs and the decline in their ability to meet their own hard cap in the last few months is the collapse in investor optimism that followed the regulatory restrictions imposed in the countries like South Korea, Japan and China. How do ICOs or Initial Coin Offerings work? They usually raise funds by launching tokens or virtual currencies of their own. These tokens are usually of two key types, security and utility tokens. While the former acts like a share in the company’s that has launched the ICO, the latter serve as redeemable coupons for availing of services offered by the new start-up. Now naturally these virtual tokens become a part of the crypto world and add to the ever-increasing number of cryptocurrencies that are listed on exchanged such as Kraken or Coinbase. Often, the trading of these tokens is done in lieu of Bitcoins and back when Bitcoin (BTC) was bullish , many investors had ended up selling their BTC holdings in exchange for the tokens offered at a low price by these ICOs.
Naturally, the open gate that lies between both these worlds means that the toxic air that has taken over the crypto’s “Upside Down” is threatening to choke ICOs as well. However this does not mean ICOs are ready to echo Mike in saying “If anyone asks where I am, I’ve left the country” just yet. Some giants are still considering ICOs. For example, Dubai-based messaging app Telegram is mulling over the idea of launching a public sale after raising $1.7 Billion in private funding in February. Observers believe that if Telegram does launch their public sale, investors will once again throng the gates and step back into the world of ICOs. However, as TokenStars CEO Pavel Stukulov says, ICOs need more than just a great idea to sell their offering. Once they can work that out, they’ll realize there is no reason to be frightened of the “Upside Down” any longer.