As 2017 winds to a close, the major financial news outlets have begun to publish their year-in-review coverage. Given the utter dominance of bitcoin and other cryptocurrencies during the second half of the year, it’s hardly a shock that many of these articles focus heavily on the future of digital currencies and other blockchain-related topics. While a large percentage of this coverage is still deeply skeptical — the consensus being variations on “It’s a bubble” — enough of those analysts and reporters have been chastened by their previous doomsday predictions to allow for the possibility that cryptocurrencies might just be here to stay. But there is one sliver of the cryptocurrency market that still generates outright hostility from the financial press: Initial coin offerings (ICOs).
Why all the hate for initial coin offerings? According to the investment experts and smart-money pundits, ICOs are: created by lazy coders seeking easy money; doomed to become the target of over regulation; and filled with scams that will inevitably implode. Is this just a knee-jerk reaction to a relatively new kind of investment, or are they banging the anti-ICO drum out of real concern?
It’s worth mentioning that this attitude isn’t limited to the mainstream press. Cryptocurrency-centric media outlet Coindesk recently published two less-than-rosy predictions for ICOs heading into 2018 — The Death of the ICO (And 4 Other 2018 Predictions) and My Advice for ICOs? I’m Sorry I Was Right… — both anticipating looming crackdowns by regulators next year.
Are these dire ICO prophesies credible? Or is this just the latest iteration of the same kind of anti-innovation fear mongering that the mainstream financial press has had towards all things blockchain since bitcoin roared into headlines back in 2013? Have ICOs become the new investment boogeyman now that bitcoin and its crypto kin outperformed virtually all traditional investments in 2017?
Let’s consider an alternate take on the future of ICOs. While more regulation is certainly on the way, for instance, there’s little reason to believe that any of it will be outright hostile to ICOs. With the notable exception of China, regulators across the globe have been relatively friendly to ICOs, with many even seeking to update their investment rules to take advantage of the new technology. Even Russia, which nearly criminalized cryptocurrencies only a year ago, has completely reversed course on digital currencies, blockchain tech and ICOs.
Estonia and Venezuela have even floated the idea of issuing their own ICOs for new government-back cryptocurrencies, although for very different economic reasons.
We’ve also seen regulators in countries like the U.S.A. and Canada maintain a hands-off approach towards ICOs in 2017, only stepping in when a given token sale has all the hallmarks of a scam. In general, however, regulators to have been cautiously optimistic about ICOs in these countries, with Canadian authorities even giving their blessing to a new banking ICO back in September.
Even the so-called “Wild West” of ICO investment may be on the verge being tamed, with crowdfunding services like IndieGoGo launching new, curated ICO platforms. For an industry that is often vilified for its lack of accountability, industry self-regulation also became a major ICO topic in 2017. That’s a strange, self-defeating position to take if ICOs truly are the “pump and dump” scenes they’ve been painted as.
Can ICOs be risky? Sure, most high-risk, high-return investments are. Will there be an “ICO bubble” in 2018? Perhaps, but it’s also possible that well-funded, fully compliant ICO projects like tZERO (founded by Overstock.com’s Patrick Byrne) could begin to reshape what stock investing looks like over the course of the next year.
No one knows what the future holds for ICOs. It’s not always easy to tell the difference between a bubble and a revolution, and the financial press doesn’t have a great track record of predicting either with much accuracy. In fact, some ICOs may well represent revolutionary innovations and an investment bubble — just like countless mainstream securities — making generalizations about the market problematic at best. No matter what happens, 2018 is destined to be an interesting, turbulent, and memorable year for ICOs.