Creative Destruction within Blockchain: hundreds of coins dead
In 2018 we’re seeing roughly 100 Initial Coin Offerings (ICOs) happening at any given month, with the industry pulling billions in startup funding. At the same time more information accumulates about Blockchain-based projects that came before, and it’s not all sunshine and rainbows.
Turns out, the number of verifiably dead projects and scams is steadily climbing into four digit numbers. According to data from Coinopsy and Deadcoins, over 1000 projects either died or ran away with the funds over the past couple years.
Because of the global nature of such projects and a grey area that they exist in, it’s easy for wannabe founders to give up and disappear. To make a bad situation worse, current state of affairs also makes it easy for outright fraudsters to loot the coffers of gullible investors. It’s estimated that the combined financial weight of such “dead coins” is over $1 billion USD.
The increasing prominence of public databases with such dead and fraudulent projects, as well as the rising skepticism towards new projects won’t stop more ICOs from occurring. They will, however, make it more difficult to get away with the same tricks.
Smart Contracts are being closely audited, most projects these days are expected to have more than just a landing page with a call to action. Of course, this will not stop neglect and fraud from occurring, but it does speak to the general trend – standards for Blockchain-based projects are going up. Technological literacy is improving and so any new «coins» get scrutinized more closely.
The bigger picture
Blockchain market is moving at a fast pace as a whole. Entrepreneurs receive instant feedback and even funding from their target audiences. This means projects succeed or fail rather quickly. In this environment things can change on a dime, trust is built or broken in as much as a single day.
The rapid pace both encourages innovation and increases risk for all participants. Despite more funds pouring into the market every month, it doesn’t look like the situation is getting any more stable entering second half of 2018.
Based on this, we should also expect to see more Security Tokens entering the arena. Blockchain startup founders have to find ways of building trust within the increasingly skeptical population of investors.
Banking on regulatory compliance seems like the next logical step in this chain of events. The industry is evolving and shaping up to be a large part of general discourse in the years to come.
Check out @Alex Partin www.alexpartin.com he is helping the Cryptochats tribe out with fresh content he is a great writer!!!