What defined the year of 2017 in the crypto world was the fulminant rise in initial coin offerings. This new crypto era spawned hundreds of new projects trying to gather funds through initial coin offerings (ICOs).
But many of these projects either failed or are no longer operating today. 2018 recorded a huge disinterest in ICOs, as most of the projects that used the 2017 momentum to raise funds for their operations never saw any results. 2019 was also not too kind with ICOs, as the trust of investors continued to diminish amid scam scandals and failed projects.
We believe that in 2020, initial coin offerings are most likely going to fade in the background for several reasons.
Investors Are More Sceptical
There are many scams in the crypto world, and many have entered the space through an ICO. Also, there have been many projects that have lied during the ICO process, so that they secured the funds they needed and then vanished.
Other fraudulent practices included faking team members, making false claims about development or prototypes, or outright copying the whitepaper of another project.
As many investors have lost their money in ICO scam, it is natural that now they would be wary of any new type of project trying to launch itself in this way.
High Risk and Few Returns
Investing in an ICO is basically putting money into a business that hasn’t yet created any product. You actually invest in the project’s promise to build that product. And if you are one of the few lucky investors that get to see the product launched, then you will have to hope it does well enough on the market for you to get some profit or use out of it.
There is a high risk that the project will not meet their deadlines, and this leads to poor returns.
Of course, you’ve heard of many successful ICOs, but given the sheer number of ICOs being launched on a daily basis, only a small percentage of those actually make it. To be more precise, the success rate is of 1%, which is not at all encouraging….