A Little Background
New Initial Coin Offerings (ICOs) are going on the market almost daily and their popularity continues to grow. Since their inception back in 2013, ICOs have become a large part of the Cryptocurrency industry and a way for all kinds of projects to get off the ground. They have allowed a lot of otherwise non starters to raise capital and get into the market place. Some of the larger projects have seen millions of US Dollars raised.
However sadly but realistically, many of the ICOs that do begin have usually failed just a few months into their token sales. The actual figure that do fail is quite surprisingly over 50%. This figure comes from the latest research by Boston College in the USA who have been studying the market recently. The research shows that over 4,000 ICO projects have started which have collectively raised over $12 billion. Most of these have commenced since the beginning of 2017 although disappointingly less than half are still operating five months after the ICO went live.
The ICO Statistics
How have the statistics come to light? Through Social Media – Twitter to be precise. The team have used this tool to evaluate just how active an ICO is over the months after it has started. However, this may not be the best way to define whether an ICO has become successful or not. It may or may not be the case that an ICO is no longer active just by assessing its Twitter account. The figures could therefore be quite skewed. However, further statistics made by the team have looked at other options for validating their report – how the project sits on exchanges. Here the statistics prove an interesting read with over 80% of those listed on exchanges after the token launch that do not “report any capital” or are not listed “on an exchange are inactive”. If you look at the number of ICOs that manage to raise a bit of capital but do not list themselves on an exchange – of which there are 420 – the amount of ICOs that fail after four months drops to just over 50%. With the final piece of data revealing the number of ICOs that do manage to list on an exchange – 440 ICOs – only 16% become inactive after the four month threshold. These figures only cover less than 40% of the total ICO count.
The research team also looked at how the ICOs performed after they had gone to token sale, which also highlighted further fascinating information. The actual best return on investment after the token sale is released is during the very first month.
In The Future
Although it is disappointing that so many ICOs never make it to the end of their lifecycle, it is somehow not really that surprising given the uncertainty surrounding the Cryptocurrency industry. There are many countries and governments that are still very cautious about the digital economy let alone investors. It is going to take a while for this to change. However until this happens, the above figures will remain to be low. Who knows what the future holds, but hopefully as confidence grows in Cryptocurrencies so will the success of ICOs.