Despite the current seemingly over-saturated ICO market conditions (where I get bombarded with two-to-three dozen of great or junk re-targeting campaigns every single day), here is why I believe ICO boom is only starting to unfold:
Interim issues on the demand side:
1. Scale-ability issues of crypto exchanges
Many exchanges are overflown with new applications and do not accept new clients, which means a whole lot of new willing-to-pay ICO participants are held at bay unable to fully integrate themselves into the demand curve. Once the KYC backlog is cleared and they “release the gate”, a huge herd of new retail investors will be rushing to get their piece of the action.
2. Steep learning curve
An absolute majority of current crypto market players are still not fully understanding HOW to participate in an ICO, e.g. the limitations of sending funds directly from exchange wallets and the confusion about ERC-20 capable wallets, lack of familiarity with MetaMask for Ethereum and so on and so forth. All this implies that the real supply of capital to ICOs from retail investors will come as soon as the crowd of new investors climb along the steep learning curve of crypto-currencies.
3. Absence of institutional investors
Lack of regulation prevents institutional investors from engaging into ICO market. While this might be beneficial for the current ROI to the retail investor, it may quickly change with the introduction of regulations across multiple jurisdictions later this year. The entry of institutional capital into ICO market will shift the demand curve further to the right while hammering down more nails into the coffin of the traditional IPO industry.
Factors influencing the supply side:
1. “Blockchainization” of economy
The process of “blockchainization” of the global economy and humankind as a whole has just begun. It will be rolling across the globe touching all the industries and every aspect of our lives. This means that on the supply side flow of new tokens has just started, and we will see a lot more new and established companies launching ICOs in 2018 and beyond.
2. ICO flotation costs and credibility
Today low ICO flotation costs provide a low barrier to entry to ANY player, including those whose main objective is to defraud investors. As crypto and ICOs become more mainstream, budget requirements to market and promote ICOs will only increase. Saturation will drive flotation costs higher and mandate a lot more $$$ in ICO budget to get through the clutter and secure sufficient share of voice for your otherwise perfect ICO idea.
While this may seem detrimental on the supply side, increased flotation costs may indirectly help to organically weed out fraudulent schemes, which are so strongly associated with ICOs today. This will inevitably boost overall credibility to new levels, driving general acceptance on the demand side.
Of course, any new regulations coming later this year may trigger new developments and modify the entire landscape of ICOs from what we see today.
You can reach me with questions or comments on LinkedIn at https://www.linkedin.com/in/geneswinton/