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Study Concludes 80 Percent of ICOs in 2017 Were “Scams”

Initial Coin Offerings (ICOs)–The bad news for ICOs continues to roll out this summer.

Last month, TechCrunch published a review of the crypto industry, concluding that over a thousand projects were already considered dead, despite some still having a presence on exchange and coin listings. The overwhelming majority of failed projects were in the form of short-lived ICO projects, which barely made it out of the fundraising period before dying in the interim following coin issues.

Research out of the Boston College Carroll School of Management supported this claim, when they found that over half of all ICOs die within the first four months of issuing their tokens. Only 44% of the projects were able to sustain any sort of growth or momentum past the four month mark, with the survival rates dipping even further thereafter. While they concluded that the profits for ICOs are still substantial relative to the traditional stock market (about 82% ROI in 2018), there is a significant drop-off in return from 2017, where some investors were collecting four-digit percentage gains on their investment. In addition, the risk of investing in ICOs has steeply increased despite the fall in return, which the researchers found antithetical to good investment practice. They also found that most of the profit surrounding ICOs occurred in the first week of token issues, with a steep drop off past the two week and two month-mark, thereby recommending that ICO investors sell their coins as quickly as possible to insure the greatest risk/reward return on investment.

All of this is troubling given the growing landscape of ICOs in 2018, already surpassing the total volume of projects issued in 2017 despite being only halfway through the year. As prices for established cryptocurrencies continue to plummet, more developers are drawn to the industry of cryptocurrency via the ICO format as an unregulated road to riches in the volatile market. However, a new study concludes that the majority of these “developers” are more akin to scam artists, and that the entire industry should be vigilant in promoting and reviewing ICO projects.

Issued by the ICO advisory firm Statis Group, the research concluded that 80% of ICOs in 2017 constituted a scam. The study cites the exponential growth of cryptocurrency projects as leading to the variability in quality, up from just 14 crypto assets in 2013 to over 1500 currencies at present. While the study examined the full breadth of ICO existence in 2017, from initial proposal of the project to when the coin was ultimately available for trading on exchanges, the evidence was damning: only 20% of initial coin offerings during the year passed the criteria for being a legitimate project; the rest were scams. Three percent of the total ICO volume was declared “dead” by the end of the year, which the researchers referred to as no longer being listed on exchanges for trading. Which means, in less than a year, some coins had managed a proposal, funding, and token issue only to be such a colossal failure that exchanges would no longer list them for trading.

On a positive note, the research concluded that the majority of  monetary value was being funded to projects that the analysts rated “higher-quality”, despite the total volume of projects skewing heavily towards being a scam,

Over 70% of ICO funding (by $ volume) to-date went to higher quality projects, although over 80% of projects (by # share) were identified as scams.

While ICOs represent the current avenue for innovation and new development in the space of cryptocurrency, the vast majority of projects being labeled scams in addition to the high rate of failure is likely to draw more attention to the need for regulation in the space of crypto fund-raising.

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More than 1,000 Cryptocurrency Projects Have Failed in 2018

Cryptocurrency seems to be all the rage right now. Several businesses dot the internet landscape promising one revolutionary blockchain-based technology or other. At the heart of it all, are virtual tokens that somehow power that economy. Despite the apparent growth in the industry, many of these projects have folded up. Some have failed due to technical incompetence of the team while others have been outright scams.

Lack of Trust in the Cryptocurrency Startup Ecosystem

At the outset of the cryptocurrency initial coin offering (ICO) trend, the narrative was one of creating an environment that made it easy for entrepreneurs to fund their ideas. Traditional venture capitalist models were described as being too tedious. Thus, it seemed easier to create a business, slap a token and sell it to the public.

Presently, the ICO volume in 2018 has more than doubled that of last year. However, it is interesting to note that more than 1,000 projects have failed in 2018. According to Coinpsy and DeadCoins, two platforms that monitor failed cryptocurrency projects, these dead startups include projects like BRIG and Titanium.

Several experts have likened the ICO bubble to the internet bubble of the 90s and 2000s. The latter saw an explosion of ecommerce firms many of whom went belly up in no time. It appears that the same trend is repeating itself in the ICO market.

Pump and Dump ICOs

Pump and dump scams remain a clear and present danger in the mostly unregulated ICO market. Many fraudulent players in the market create business models that have no viable economic merit. Then they attach a worthless token with little or no utility, pumping the value and enticing investors. Once the artificial demand is created, and the price is inflated to the desired level, the operators cash out leaving investors with worthless coins.

The ubiquity of exit scams and pump & dump schemes in the ICO ecosystem is an indictment of the fundraising philosophy of the cryptocurrency industry. A lot of these projects appear to be no different from multi-level marketing (MLM) Ponzi schemes. Clearly defined vestment schedules and iron-clad token lockup protocols might go a long way in restoring some semblance of integrity to the ICO framework.

Critics like Jordan Belfort aka the “Wolf of Wall Street” refer to ICOs as the biggest scam. Even the United States SEC has taken a more hands-on approach to combat fraudulent ICO offerings. Since late 2017, the Commission has instigated a major clampdown on ICOs with subpoenas, arrests, and indictments of principal players in the sector.

Words of Caution for Investors

Investing in an ICO is akin to gambling – there’s always the possibility that investors can lose all the money they put into the project. With the loose regulatory framework guiding the industry, fraudsters have ample room to defraud unsuspecting people. Thus, investors should only put in what they can comfortably afford to lose.

Many ICOs promise that their projects will be the next Bitcoin or Ethereum. It is important not to get taken in by such unsubstantiated claims. Plan for the best but expect the worst.

Have you or someone you know fallen victim to one of these dud crypto projects? Share your experiences with the community in the comments section below.

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Tokenizer: Simplifying ICO Investing To Maximize Your Return On Investment

One of the greatest leaps of faith a crypto enthusiast can do, is to invest his hard earned money in an ICO that captivates his imagination as a feasible project, as well as his thirst for profits. The unregulated ICO industry has been a hotbed of successful projects such as Ethereum’s and Tron’s as well has total scams like Pincoin token and Bitconnect.

So how do you differentiate the gems from the dirt in ICO investing?

Tokenizer is a unique and innovative investment solution that keeps crypto investments simple for the audience. The platform helps global investors, like you and I, to tap into the ever growing crowd-funding market using blockchain digital tokens. With many ICOs being available daily, it is difficult for any one individual to choose the right one that will deliver a working product as well as a handsome Return On Investment (ROI).

The Tokenizer platform, which is duly incorporated in Hong Kong, simplifies this process by allowing users to directly pay for custom investment plans using Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC), irrespective of the size of the contribution. Once the funds are received, they are used to purchase digital tokens during token pre-sales which have discounted offers available exclusively to institutional investors or pool managers. These tokens are then sold later at a profit to ensure all users receive up to 50% net on each investment made.

Once the team accesses the token pre-sales that are traditionally inaccessible to individual investors, they purchase the tokens through an ICO pool from the individual funds collected from registered users and according to their unique simple investment plan. The team at Tokenizer manages the high profile blockchain tokens allowing the users to earn daily interest on their crypto. The Tokenizer team firmly believes that there’s a big potential in the crypto world and are particularly proud to be providing services in this field to the regular investor further reducing their investment risks.

All an interested individual has to do, is to create an account through the traditional methods of entering an email, username and a 6 digit pin code for security. As soon as that is done, the user can fund the account using the aforementioned currencies of BTC, ETH, LTC and BTH. The platform can handle micro as well as large investments thus offering lower fees and better prices than traditional banks. Once the deposit is confirmed, the user selects a customized plan and starts receiving daily earnings. The user is then free to withdraw these earnings through a cash-out option on the platform.

There is also an easy to use online calculator for users to figure out their returns based on the amount of initial investment they want to put in. The value of the initial investment can range as follows and with respect to each cryptocurrency:

  MIN MAX
BTC 0.01 50
LTC 0.25 2,500
ETH 0.05 550
BCH 0.05 550

In addition to having the above qualities, Tokenizer has a referral program where users get additional rewards for anyone who signs up for the service through them. Tokenizer uses a revenue sharing model to stimulate the expansion of the platform. Each direct referral earns a user a reward of 5% on each deposit made as well as 5% reward based on the daily dividend.

In summary, Tokenizer reduces the risk in ICO investing by having a stellar team doing the assessment of each project thoroughly to guarantee its viability. If the project proves to be solid, the team has access to pre-sale events where they buy digital tokens in bulk and through a pool of funds deposited by users on the platform. These tokens are later sold at a profit guaranteeing a 50% Return on Investment for each user at the end of the whole process. There is also a referral program that introduces further revenue sharing as well as introduces new funds from the new users, to the ICO pool.

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