NEW YORK, Feb. 26 — Investment in cryptocurrencies is highly
risky, with nearly half of initial coin offerings (ICOs) failing last year,
a study showed.
In contrast to initial public offerings where investors gain shares in the
ownership of a company, an ICO is a controversial means of crowdfunding
centered around cryptocurrencies.For some startup companies, ICOs are a way
to raise early capital more quickly than they could through venture
funding. They can raise millions by creating digital tokens and selling
them through the ICO process.A total of 902 ICOs took place in 2017,
according to ICO tracking company Tokendata. Cryptocurrency news website
Bitcoin.com studied these ICOs and found 142 of them failed at the
fundraising stage and another 276 failed after fundraising due to exit
scams or poor performance.
In other words, 46 percent of last year’s ICOs failed after raising over
104 million U.S. dollars, Bitcoin.com said.Moreover, an additional 113
projects can be classified as “semi-failed” because they either abandoned
their social media pages or have few adopters to achieve any success,
Bitcoin.com added.Had these semi-failed ICOs been included, the failure
rate of last year’s cryptocurrency crowdfunding jumps to 59 percent.A
bitcoin fever has fueled a massive market rally last year despite strong
skepticism from economists and bankers.Bitcoin prices soared from around
1,000 dollars at the beginning of 2017 to more than 19,000 dollars in
mid-December, according to CoinDesk’s bitcoin price index.
In the following days, however, its prices plunged dramatically, making
bitcoin lose a third of its value all of a sudden.Trading of bitcoin
continues to be wild this year, with its prices swinging between 6,000
dollars and 17,000 dollars. In the past week, the digital currency has been
struggling to remain at a level of 10,000 dollars.With ICO mania showing no
signs of abating, Bitcoin.com said there’s no reason to expect this year’s
crowdsales of cryptocurrencies to fare any better.The website warned that
cryptocurrency investment in 2018 is riskier than ever thanks to diminished
returns, increased competition and a never-ending stream of opportunistic
ICOs. – XINHUA
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