In 2017, 234 companies raised $3,7 billion (and counting) across the world via ICO, leading the experts to talk about an “ICO boom” or “ICO bubble”. This year Initial Coin Offerings morphed from a generic crowdfunding concept of “two geeks and a whitepaper” to professional and highly specialized ventures. We have covered some of the most successful ICOs in our 2017 review. Next we will discuss trends, doubts and forecasts for the ICO market in 2018.

ICO at the Crossroads

Stefan Thomas, CTO at Ripple, is skeptical about the future of ICO in the coming year. According to his forecast, regulatory authorities are going to come down hard on fraudulent ICOs and bad actors. The regulatory crackdown will affect even the better-behaved ICOs. Another source of doubts for the expert is low liquidity of utility tokens launched by ICOs.

According to Kaspersky Labs, the ICO boom will go down in 2018 following failed launches of unfinished products, and Vitalik Buterin, the founder of Ethereum, is convinced that 90 per cent of ICOs will eventually crash. However, in the same sentence Buterin talks about the emergence of the so-called “tokens 2.0” that will bring security to the ICO scene.

ICO 2.0

The birth of ICO 2.0 will be brought about by a set of two factors: actions of regulatory authorities and emergence of security tokens within the framework of ICOs. The ICO scene will become even more specialized and professional, as more and more startups will bring in the fray experienced lawyers, consultants, bankers and traders with Wall Street credentials. A simple whitepaper won’t suffice to make investors believe in your product. Extra regulatory formalities will also have to be completed, and professional skill will be required for that, too.

Jerry Brito of Coin Center is convinced that ICO is here to stay as a new funding model. The slight decline in the quantity of ICOs in 2018 will be due to increased enforcement against scams and weeding out weaker projects.

In 2018, digital IDs will be developed to certify compliance with regulations. Some of these solutions are already around – SwissBorg who are in the middle of their token sale offer a new type of shares that gives token holders more rights and security.

A New Model of Tokens

Many experts echo Vitalik Buterin’s sentiment about the emergence of new model of tokens for a more mature ICO market. William Mougayar, author of “The Business Blockchain”, thinks that tokens as we know it attract the wrong kind of investors, seeking instant profit. The solution, in his view, is to abstract from the tokens themselves and concentrate more on the underlying blockchain.

Shawn Wilkinson of Storj Labs thinks that tokens in 2018 will be defined by utility. Only a minor portion of tokens (less than 10 per cent) of the ICOs launched in 2017 are used in running of their respective networks. When the token market bubble subsides, the tokens without any sort of utility will end up having no value at all. Wilkinson lists just a few ways in which tokens could be used in running and fueling their platforms: purchasing services, creating a self-sustained ecosystem and automated smart contract payments.

The future of ICOs is far from definite, but it makes it all the more interesting to find out what happens next. We are in for an exciting ride next year!

Stay tuned for the final installment in our series, where we will cover some of the hottest ICOs of 2018.

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