This is disappointing level of journalism by Bloomberg. When did it become journalistic "research" to just quote a bunch of Medium blog posts on the web?
For one, the "research" quoted by this article is conflating market cap with actual realized losses. A coin's market cap tells you absolutely nothing about how much was actually raised in an ICO. If I issue 1 trillion tokens and sell one for $1, all of a sudden I'm a $1 trillion market cap.
Article's primary source found here: https://medium.com/satis-group/ico-quality-development-tradi...
It claims 81% of coins with $50M+ market cap were scams...but the only data it shows is a bar chart, with no links to actual data tables driving the chart.
I agree. I think it's the end of the beginning and putting aside all the scammy hype stuff Bloomberg and others have been happy to promote, we are now entering a period where credible crypto business logic will start having an impact in mainstream financial markets, exchanges and MTF's as the space matures...
It appears very little (succeeded in hitting funding targets, posted a product roadmap and a beta deployment of a chain/platform that showed some evidence of development in the past three months) per the source. Not really sure how you could justify a notional valuation of $50m before getting to that stage...
If you create 50,000 coins (or shares, or whatever), and sell one for $200, then you have a "$1 million market cap!", but you actually got $200.
For a scammer behind a coin with a $50m market cap to have walked way with $50m, they would have needed to have sold all the coins at that valuation. In some cases, this may have happened. In many others, they will have sold some coins at that valuation, and others at lower valuations as the coin collapsed. In a few cases, all the transactions may have been "wash" transactions (aka, selling a coin to yourself under a fake name), and the scammer may have received nothing.
It's hard to know how much a scammer profited without digging into it, especially in the crypto space where wash transactions are so easy to get away with.
I would say it's impossible to know unless you actually run and operate the exchange(s) through which they ran all of their 'sales'. The exchanges are often complicit in listing these coins and make money from a fee which they demand in order to list and promote them. the exchanges hold all of the real power in cryptocurrency, and there are only a handful of them.
HA! No, all crypto valuations only include the free float in the market! Check out coinmarketcap.com , the leading "valuation" site, and notice that it only counts circulating supply, no matter how small a percent it is to the total supply.
All metrics related to "crypto total market cap" are based on dubious circulating supply metrics, when the reality of this is many times higher, even though it is an accounting nightmare regardless.
Next up, most coins actually did sell all of their free float / circulating supply in exchange for a more liquid currency.
So yes, the $50million projects actually received $50m in usd/btc/eth AS WELL AS granted themselves a sliver of the new currency, akin to private equity and every share company ever.
It is double plus good, and scammers are currently walking away with that. But if they are smart, they make their new coin valuable because an even greater windfall awaits and then that means it isn't a scam project at the current threshold of legitimacy.
I don't think you really understand what "circulating supply" means. It doesn't measure how much is actually changing hands, it just measures how much theoretically could. And even at that, it's very vulnerable to manipulation.
> But if they are smart, they make their new coin valuable
Yes. About 75% of venture-backed companies fail to return cash to investors.[1] Many of those failures are zombies - the company continues to operate, can cover its running expenses, but can't pay back its startup costs. In the ICO world, that would be considered a success.
So many of them are paying people living wages, or at least had been during their lifetime. Compare that to failed or scam ICOs, which do literally 0 people any good except maybe the "founder."
Well let's not forget about all the productive hosting business this is drumming up, some poor megacorporation is barely holding on by offering their cloud hosting services to all these ICOs.
(there isn't a window fallacy we can't broken here :D)
Are you saying that, if you take 100 random startups and look say 5 years later at how many survived AND are valued over 50 millions, you have more than 3?
I would like to know which distribution you sample from :-)
What I meant to say, is that if we look at the coin graveyard, we are including 100% of the failed coins -- because ICO were heavily publicized.
If we look at the startup survival rate, we are not including 100% of the attempt. Some will consume money, but never even make a blip on the radar.
If you consider the failure rate of startups vs the failure rate of ICOs, I think ICOs show a higher success rate - and even more when you raise valuation.
Here is a more extreme example: A startup valued over 1 billion is a unicorn. An ICO valued over 1 billion is at the moment (with rock bottom prices) anything above the top 18
We can disagree on the valuation formula (fair critic), but even with that a 4% success rate >50M is nothing to sneer at.
It's possible to see failed startup if we use figures from an accelator, like say YC.
Ahem I believe you mean to say that it's a decentralized donation that uses cutting-edge, game-changing BLOCKCHAIN TECHNOLOGIES that will REVOLUTIONIZE the world as we know it. /s
Which a lot of donors are actually completely ok with. The insistance on seeing this new technology and the opportunities it offers through the lens of traditional equity/securities is strange.
It's not strange at all, since unfortunately the average person who bought into these ICO's thought they were similar to IPOs (and that was the dubious intention behind calling them "ICO's").
You can look through thousands of reddit posts of people thinking they were "getting in early" on some hot new tech company. You're living in a fantasy world if you think even a sizable minority gave money to ICOs knowing it was basically a donation.
There is too many shitcoins. Which means too much speculation. One day it will all hit a brick wall. coingecko.com has a good list with a little amount of shitcoins. But when the shit storm starts and people move their money to cryptocurrencies they will probably go to VDA which I'm guessing institutional investors use which is on cryptonaire.com
When it happens, it will be good and bad for the market. Real value in good places but a bad time in history. Due diligence everyone, due diligence.
jobs and living wages? yes they are normal startup projects with funding. do you think they just drink beers on a beach? that's what the media wants you to see. have some critical thinking.
A quick alternate analysis of ICO liveness is found by simply checking the number of tokens currently being traded with volume on idex.market: total of 291 as of todays figures, with 195 over 1 Ether/day, 80 over 10 Ether/day and 22 over 100 Ether/day. This amounts to 35%, 23%, 9.75% and 2.6% rexpectively of the 821 reported by deadcoins.com. Further to this deadcoins.com only labels 121 of these as scam coins with the majority (633) being labelled deceased. Also, a large number of the listed coins have no references to back up the given assessment.
Seems Bloomberg's reporter neglected solid research in her haste to play the funeral drum.
This article is a PR piece about an activist investment firm that buys up and revives dead coins with a new dev team and rebranding. It is masquarading as the "I told you so" article that you already wanted to read. But thats not what it is at all
As someone that has led zombie coin revivals multiple times over the last several years (after spending months buying up a coin from bagholders), hit me up
just respond to this message and put your email in your hackernews profile
This new firm has got one thing right: Bull market or bear market it doesn't matter, you can get hockey stick growth.
For one, the "research" quoted by this article is conflating market cap with actual realized losses. A coin's market cap tells you absolutely nothing about how much was actually raised in an ICO. If I issue 1 trillion tokens and sell one for $1, all of a sudden I'm a $1 trillion market cap.
Article's primary source found here: https://medium.com/satis-group/ico-quality-development-tradi... It claims 81% of coins with $50M+ market cap were scams...but the only data it shows is a bar chart, with no links to actual data tables driving the chart.