Wikipedia Is “Absolutely Never” Conducting an ICO, Says Co-Founder Jimmy Wales

Francisco Memoria
  • 1 Aug 2018
  • /
  • In #ICO
  • Wikipedia founder Jimmy Wales recently revealed the non-profit organization is "absolutely never" going to conduct an ICO.
  • The website, the fifth most popular in the world, currently survives off of community donations.

Wikipedia co-founder Jimmy Wales recently revealed the non-profit online encyclopedia is “absolutely never” going to conduct an initial coin offering (ICO). Wales himself is a well-known cryptocurrency critic, who’s dismissed the fundraising method in the past.

Speaking to Business Insider after attending the BlockShow conference in Berlin, Wales clarified Wikipedia will never attempt to raise funds through an ICO. He said:

We are absolutely never going to do that. Zero interest.

Jimmy Wales

Currently the website, the fifth most visited in the world, survives off of community donations, a practice Business Insider touts as have been perfected by Wikipedia itself. Per Wales, it manages to raise its funds after conducting various A/B tests on the platform to get people to pull out their wallets.

The website’s lack of interest in cryptocurrencies and initial coin offerings saw the interviewer ask why Wales attended the BlockShow conference. Per his words, blockchain technology, despite his reservations, is a “super-interesting technology,” that’s “clearly a bubble with a lot of mania and hype around it.” Moreover, he added people pay him to speak at conferences.

Notably, Wales claimed the cryptocurrency space is “absolutely, definitely in a bubble,” during his speech at BlockShow, as CryptoGlobe covered at the time. He further promoted his new for-profit venture, WikiTribune, an organization “completely separate from Wikipedia” that sees voluntaries contribute news and research to create “evidence-based journalism.”

Per Wales’ words, the cryptocurrency space is in “serious need of real journalism,” a problem that saw him present WikiTribune as a solution. Per the entrepreneur’s words, the platform came as a response to “recent attacks on the media and terms like “fake news”.”

In October of last year he warned against ICOs as these are “absolute scams and people should be very wary of things that are going on in that area.” Earlier this year, a study found that as many as 80% of ICOs conducted last year were scams, who managed to get 11% of the funds raised last year, while 70% went to “higher quality projects.”

The Wikimedia Foundation has been accepting bitcoin donations since 2014, shortly after Wales claimed he was “paying” with the flagship cryptocurrency. As CryptoGlobe covered, the most prolific editor of Bitcoin’s Wikipedia page is a Czech grandpa, who doesn’t own any crypto himself.

ICO Market Down 97% Since May 2018: BitMEX Research

Initial coin offerings (ICO) have only managed to raise $40 million so far this year, according to BitMEX’s research division.

Researchers at the Bitcoin Mercantile Exchange, or BitMEX, a Seychelles-registered and Hong Kong-operated cryptocurrency derivatives exchange, published a blog post on May 13th, 2019 in which they noted that the ICO market is down 97% since May 2018.

Companies “Changing The ‘C’ In ICO To An ‘E’”

According to BitMEX’s research arm, several blockchain projects have “changed the ‘C’ in ICO to an ‘E’, perhaps in an attempt to assist with raising capital.” Indeed, there have been quite a few initial exchange offerings (IEOs) which have been launched this year.

An IEO is also a type of crowdfunding campaign, however the fundraising process is usually facilitated by the management at a centralized cryptoasset exchange.

As noted in BitMEX’s blog, the Dfinity and Telegram ICOs (held during 2018) raised $1.7 billion and $195 million, respectively. However, the native tokens for both projects have not been listed.

Notably, the EOS ICO, which was launched by the management at Block.one, a Cayman Islands-registered open-source software publisher, generated a record $4.2 billion. However, the EOS token had been trading at -4% of its issuance price (at the time BitMEX released its report).

Projects Shutting Down Due To Regulatory Pressure

Due to regulatory restrictions, the highly-anticipated Basis stablecoin project was forced to shut down and the funds were returned to investors, BitMEX confirmed. Meanwhile, some seemingly promising projects such as PumaPay and UnikoinGold are currently trading at -93% and -88% of their issuance (at time of ICO) price, BitMEX’s researchers noted.

Going on to compare the funds raised via IEOs with ICOs, the data compiled by BitMEX revealed that the BitTorrent (BTT) token sale, held on Binance on March 2nd, 2019, managed to raise $7.5 million and the current “return vs IEO price” stands at 433%. Other IEOs also launched on Binance such as Fetch.AI and Celer are not doing as well, as their “return vs first exchange trade price” stands at -55% and -29.4%, respectively.

Most ICO Investors “Earned Strong Positive Returns”

Commenting on the relatively large number of IEOs launched in recent months, BitMEX’s research team acknowledged that the new type of crowdfunding model has been “somewhat successful.” The researchers confirmed that “smaller exchange platforms” have tried to introduce IEO models which are similar to those used by major exchanges including Binance, Huobi, Bittrex, and OKEx.

Most IEO investors have “earned strong positive returns based on the IEO [issuance] price,” BitMEX revealed. However, the researchers have found that the return on investment (ROI) has been “typically poor” after the tokens began trading actively on various exchanges.

According to BitMEX’s estimates,$38.9 million have been raised so far this year through IEOs (as of April 25th, 2019). Notably, Binance, the world’s largest exchange in terms of trading volume, has been “the most prolific IEO platform by a considerable margin,” BitMEX’s researchers concluded.

Some other key observations made by BitMEX’s research team are as follows:

  • “On average, only 4.4% of the total token supply [has been] made available in [IEO token] sales”,
  • “There are opportunities for project teams to make considerable profits from selling coins they granted to themselves,”
  • “The 2019 IEOs were priced at a level which implies a total market capitalization of $907.7 million, based on the disclosed total token supply.”