ICOs (Initial Coin Offerings) are one of the hottest topics of the year because it’s an easy way to raise cash and it’s largely unregulated. Even last night at Red Bar + Restaurant, a rooftop bar at the International Finance Center in Hong Kong, I heard chatter of different upcoming ICOs to invest in. Then there’s Twitter where the conversation literally never stops amidst the latest rumors, panics, cryptocurrency news, and blockchain projects.
It was a red hot summer with $462M raised in June, $575M in July, and the peak was reached in September with a whopping $663M of ICO funding.
ICO Cool Down
In the hot days of ICOs, you could buy tokens at the ICO price and in the first month flip that for a profit. Discounts of 10-20% are frequently given to those who participate early during the token sale period. Those that are lucky enough to get into the ICO pre-sale may even get a 30-40% discount. When these tokens finally get listed on an exchange, some portion of people who initially invested into the ICO will sell their tokens for a profit.
Flippers flooded the market. Now it’s common to see the token values decrease as they get listed on exchanges. Bancor’s ICO price was $3.86 and dropped as low as $1.38 in their first month of trading. Many projects running ICOs are now enforcing lockup periods based on the size of the discount to maintain a stable token price.
With scams ongoing, the public is generally wary of putting money into an ICO. The SEC has charged two ICOs with fraud. Tezos has been hit with two class action lawsuits. There is a lot of skepticism around projects that are being created now. Do they really need to be on blockchain or are they looking to get rich from ICOs? More than just a white paper is needed. You have to have a solid team, a solid prototype or users, and some sort of self-governance for investors to be confident in you.
Crypto and blockchain are here to stay
However, the blockchain and crypto community remain absolutely unfazed by this. Last week, I attended the 2nd annual Blockchain Conference in Hong Kong. Everyone in the industry was more energized than ever about the potential opportunities with blockchain. I had conversation after conversation with entrepreneurs about how disruptive this technology is. They believed this well before the ICO hype.
AI has been absolutely on fire the past few years. But the power of this technology has largely been trapped inside of big companies. The data, the research, the computing power, etc., is all centralized in companies like Facebook, Google, Microsoft, or Amazon. This means the latest advancements in this industry are in the hands of mega corporations and they are hoarding it for themselves.
AI advancements needs to come out of these big companies and come into the hands of the community.
Smart folks like the team at Ocean Protocol are working on this problem. Ocean is a protocol and network that incentivizes users to provide a vast supply of high-quality data. The data is used in training artificial intelligence models. Separately, there’s the team at Trane.AI working on a decentralized way to tag, store, and model data.
The marriage of AI and blockchain is inevitable and will be celebrated in the days to come. They’re two fundamentally disruptive technologies and we’re doing our bit to expand the horizon.
With or without the hype, ICOs are one funding mechanism to fuel new companies brave enough to stand shoulder to shoulder with the incumbents and challenge them at every step to build a brighter future. It will leave us with the next wave of disruptive technologies in the way the dot com bust left us with Google, Amazon, and Ebay.