That would not have expected from Civil: This week, the Blockchain project has declared its ICO failed. Despite the recent partnership with Forbes, the Blockchain journalism platform was unable to reach the minimum investment target (softcap) of 8 million $. If one of the few substantial ICOs these days can not even take a single-digit million amount, then the question arises whether ICOs have not given up in their current form.
In addition to all the air numbers, there are always blockchain projects that are really innovative, which are serious. Just a year ago, these blockchain projects could easily crack a 10, 20, or 30 million $ softcap. Even obvious scams penetrated these areas. Now, after the bursting of the ICO bubble, the confidence of Blockchain projects is down. The communication model of a Donald Trump does not work anymore. Too often, investors have heard phrases like, "We're the best" or "No one is as innovative as we" owned by ICOs. The ICO hubris was overtaken by reality: it was not delivered, the capital has started to retreat.
The 90 percent drop
The fact that ICO investment has declined is not bad per se. Due to the higher demands on the investor side, fewer and fewer projects are succeeding in selling their tokens and listing them on the stock exchanges. The flood of useless tokens will be contained, the market will become more professional. This is healthy development, albeit painful for many investors. Nevertheless, a collapse of around 90 percent of the ICO market points to a tangible crisis in the ICO sector, there is no doubt about that.
This crisis is particularly evident in the promising Blockchain projects, which have barely managed to reach a comparatively low softcap by the end of 2017. Civil is representative of many failed ICOs that failed despite a good team, serious partnerships and a challenging use case in the second half of 2018.
Is an ICO still worth it?
Quite a few blockchain companies are therefore asking themselves if they should even carry out an ICO at all. Moreover, marketing costs have long since decoupled. Expenditures are becoming increasingly high, desperately attracting attention from the investor side. The former promise to collect tens of millions with little effort is history.
The hope now lies in a change in the entire ICO sector. Some blockchain start-ups are waiting and hoping for a replacement of the term initial coin offering and the emergence of security token offerings (STOs). If security tokens are present in a regulated environment and with newly created trust, there will be many blockchain companies who will actively re-think tokens.
From ICO to STO
The original basic idea of an ICO is ingenious and will prevail sooner or later. ICOs are the future of corporate finance, but they will probably not be ICOs anymore. It will be mainly security tokens that replace previous pseudo-utility tokens. STOs, unlike ICOs, are the more honest option when a company is primarily concerned with raising capital. Institutional players will dominate the market, as will the regulated financial sector. Occasionally there will be a utility token again. In contrast to today's utility tokens, however, these will take over a function in a truly decentralized network. There will be commercially successful cases where more than a handful of people will use utility tokens for their intended purpose - trading is not one of them.
For the time being, however, the big money will be invested in security tokens and the tokenization of real assets, at least in the next few years - assuming regulatory bases. Accordingly, companies and investors eagerly wait for the go of the regulatory authorities.