By Guest Author – Sam Reads, Birmingham, United Kingdom
The cryptocurrency market has experienced a major boom in investors and speculative buyers pushing its market capitalization to a new high of close to $1 trillion. Bitcoin claimed much of the headline creating a media storm around the globe. Well, a single day didn’t close without one of the major mainstream media making a headline on its trend. It has, however received some opposition from governments, central banks, and some financial institutions, with many leaders labeling it a bubble.
In its midst, ICOs have gained from the bitcoin popularity as an avenue for startups to raise capital while reducing the legal and financial hurdles for raising initial capital. The Ethereum network needs to watch for scammers as token sales become the next big thing. Regulatory Authorities have raised concerns about the viability of such token sales. The DAO had one of the largest crowdfunding sales in history, exceeding what the creators expected. It however failed during its implementation citing numerous security flaws and vulnerabilities. The SEC and other regulatory Authority have tried tame them by charging some with fraud and other being forced to give a refund to the investors.
This however has not impacted the ICO market with the demand of tokens closing 2017 in a record high sale of $1.2 billion. Centralized crowdfunding seems to maintain its space as only 33% of token listed managed to reach their target. However, the record sales experienced by some of the startups cannot be attained from traditional crowdfunding. The record set by the DAO token sale has been eroded with new entries filling the position. Filecoin followed in September raising a record amount of $200 million with Tezos token sales being the highest with a record sale of estimated $230 million. The EOS token is currently the only active token sale with the $200 million mark, with an increase less likely to happen. However, other token sales have managed to raise significant amounts with Sirin labs leading (raised $158m), The Bancor Protocol (raised $153m), Polkadot (raised $144m) and lastly the QASH (raised $109m) in 2017.
From a recent investigative report on the DAO, it concluded that the token should have been categorized as a security. Even without regulatory control, the ICO market is bound to regulate itself as the Ethereum network seeks to increase its network activity. If the regulations become more stringent the future of ICOs will be dingy.
