With new statistics showing that nearly 81% of ICOs eventually become scams, it has led many people to wonder if they are really worth the risk. Although they are considered to be incredibly important for blockchain projects, as they allow the creators the opportunity to raise millions of dollars for their project, new research has shown that they are actually very detrimental to this already fragile market.
This new doubt has come from recent statistics from Statis Group, who showed that very few ICOs are actually legitimate. Scam ICOs can be recognised if they raise money without fulfilling their promise and never show any working code, and the worrying thing is that these happened all too often.
As well as scams, there are also different companies who successfully complete the funding and development, but never get listed on an exchange. Projects like this often cause friction for investors, who are looking to recover their initial contributions.
Taking the above into consideration, the research shows that a whopping 81% of ICO are in fact, scams. Just a tiny 8% of all ICOs actually make their way onto a reputable cryptocurrency exchange. This is very concerning indeed.
If you consider the projects that are currently listed on exchanges, which have raised between $50 and $100 million, over 55% of them are actually struggling to deliver a working project. The ones that raise the more money appear to be more successful than those that do not; however, it is pretty typical to see these ones struggle at a later stage. The projects with a market capital of over $1 billion appear to be the ones that perform the best, but very few actually make it to that level. Given the statistic shown above, it would imply that ICOs are not worth the investment risk, however, they are needed, and the more people who invest in them, the more likely they are to succeed. It is the classic catch 22 scenario.
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