ICOs Raised 95% Less in January 2019 Than in Their Best Month, Data Shows

Omar Faridi
  • ICOs are not receiving as much capital as they did during the crypto bull market of 2017.
  • However, ICOs are still performing better than what they did January 2017.

Investments in initial coin offerings (ICOs) have dropped by nearly 95% according to data from cryptocurrency analytics firm Coinschedule.

In March 2018, ICOs raised over $5.8 billion, however Coinschedule reported the popular fundraising method attracted only $291 million in total investments during January 2019. Although ICOs have not generated as much capital as they did when blockchain project valuations were a lot higher, Coinschedule pointed out that ICOs still raised over 70% more funds last month than they did in January 2017.

When compared to the time period during which cryptoasset prices hit record-level highs in late 2017 and early 2018, the ICO market has slowed down considerably. Coinschedule’s data shows there were less than 50 ICOs launched in the first week of January 2019. Moreover, the ICO ecosystem received only $6 million in total investments from 424 different public token sales tracked by Coinschedule. Significantly, this is the smallest amount raised by ICOs since 2017.

$1.4 Billion Raised From ICOs In Q4 2018

As CryptoGlobe reported last week, ICOs netted 25% less in funding during Q4 2018 when compared to Q3 of the same year. This, according to data from ICOBench which also revealed in the same crypto market report that there were 594 ICOs completed in Q4 2018. During the previous quarter, 554 ICOs were successfully conducted (as they managed to reach their fundraising target).

Data from ICOBench revealed that $1.4 billion was raised by ICOs in Q4 2018, while Q3 of last year saw public token sales generate $1.8 billion - according to ICOBench.

As covered, a study conducted by Satis Group found that more than 80% of ICOs launched in 2017 were scams. However, the fraudulent token sales only managed to attract 11% of total investments made in ICO projects (during 2017). According to Satis Group’s report (published in July 2018), approximately 70% of the funds raised by ICOs went towards helping legitimate crypto and blockchain-related projects.

Security Token Offerings (STOs) Provide Regulated Investment Options

In December 2018, Jerry Ji Guo, a Chinese-American who previously worked a journalist for the New York Times, was charged for his alleged involvement in a $3.5 million ICO-related scam. Guo is now facing up to 20 years in prison as he was found guilty of orchestrating fraudulent schemes in which he stole large amounts of cryptocurrency from blockchain startups that had employed him as a consultant.

Due to the large number of scams orchestrated under the guise of ICOs and the lack of proper regulations for the crowdfunding method, many companies have introduced security token offerings (STOs). These are regulated token offerings that allow investors to acquire cryptoassets which are tied, or backed by, real-world assets such as stocks, debts, commodities, and real estate.

CNBC’s Brian Kelly Explains the ‘Huge Difference’ Between Libra and Bitcoin

On Tuesday (June 18), the day that Facebook unveiled Libra, its new global cryptocurrency,  CNBC's Brian Kelly, who is also the founder and CEO of crypto hedge fund BKCM LLC, explained the "huge difference" between Libra, which he thinks of as digital fiat, and Bitcoin, which he thinks of as digital gold, and said that this was the reason that he does not consider Libra to be a real cryptocurrency.

In a segment titled "Facebook Goes Full Crypto" on CNBC's "Fast Money" show, the host, Melissa Lee, asked Kelly to explain why he does consider Facebook's Libra to be a real cryptocurrency (like Bitcoin or Litecoin).

Kelly started his "crypto class" with a super simple explanation of how Libra works from the point of view of a user:

  • You exchange some of your local fiat currency (say, dollars) for Libra tokens
  • You can then pay for goods/services using your Libra tokens
  • Whenever you want, you can convert some/all of your Libra tokens back to fiat currency

This all sounds fine, but Kelly says that one unspoken truth here is that as a user you need to trust the Libra Association to do everything behind-the-scenes correctly and honestly. In contrast, he says, a real cryptocurrency, such as Bitcoin, is trustless. As Satoshi Nakamoto explained in the Bitcoin white paper (which is titled: "Bitcoin: A Peer-to-Peer Electronic Cash System"), Bitcoin is "an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party."

According to Kelly, the main difference between Libra and Bitcoin is that Libra is trying to be essentially digital fiat (although he used the term "digital dollar" because he was addressing mainly a U.S. audience) and so it has all the "characteristics" of traditional fiat currencies, whereas Bitcoin is "digital gold" (and it is "probably a lot better than gold") and unlike Libra does not need a trusted third party, and to him "trustlessness" is what makes crypto "revolutionary". He said that this is why we can say that Libra "keeps the existing system" while Bitcoin "does away with it."

Kelly went on to say that Libra is not substantially different from systems such as PayPal or Venmo; it's the "next iteration of them". 

Meanwhile, David Marcus, who is the Co-Creator of the Libra currency and the Head of the Calibra project (a custodial wallet for Libra) at Facebook, thinks that it is wrong to compare Libra and Bitcoin since they do not belong to the same category:

One of the people who replied to Marcus' tweet was Dr. Saifedean Ammous, an economics professor and the author the book "The Bitcoin Standard":

 

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