Thankfully Techcrunch isn’t referring to another natural disaster killing thousands of people — its latest report refers to the blockchain-based startup market and the fact that “thousands of cryptocurrency projects are already dead.”
Techcrunch extracted data from Coinopsy and DeadCoins, two sites that currently track failed crypto projects. The results indicate that at least 1,000 projects have gone down the tubes in 2018 so far. The dead projects include out and out scams, as well as Titanium, which fell foul of an SEC investigation.
What seems to be the problem?
The fact that it’s a new sector with undefined rules and regulations is part of the problem, but another issue that many may not have considered to be a problem is the fact that token sales raise millions. Techcrunch, commenting on the way startups are flooded with cash says: “When a startup has too much fuel too quickly the resulting conflagration ends up consuming both the company and the founders, and there is little help for the investors.” Who knew that a fledgling business having too much cash could cause it to spontaneously combust?
According to Techcrunch, these ‘fires’ are erupting everywhere and its writers call it a “global phenomenon.” It also says that scam and questionable ICOs raised $1 billion in 2017 and that there were at least 297 ‘questionable startups’ involved.
Examples of this include organisations claiming to fix “broken ICOs” and these “fly-by-night” operations are destroying the sector overall.
It particularly picks out startup ICOs using a multi-level marketing (MLM) strategy as a cause for concern and advises them to takes a look at the Kickstarter model instead, because it and others like it have made “trust an art form.” Techcrunch also adds, “Unfortunately, the lock-ups and pricing scams the current ICO market uses to incite greed rather than rational thinking are hurting the industry more than helping.”
As always, the advice is only invest what you can afford to lose.