Ethereum co-founder Buterin thinks most ICOs will fail


Vitalik Buterin spoke about the weaknesses of ICOs during ETHWaterloo hackathon. Ethereum co-founder Buterin thinks most ICOs will fail and 90% of them will go to zero.

31 October, AtoZForex - Ethereum co-founder Vitalik Buterin shared his opinion on the current situation with digital tokens and initial coin offerings (ICOs). Speaking at the ETHWaterloo hackathon, Buterin stated that 90 percent of initial coin offering (ICO) projects or ERC20 tokens will likely fail in the long-term. In his view, 90 percent of the tokens are going to zero.

Ethereum co-founder Buterin thinks most ICOs will fail

Addressing the event, Buterin says:

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“It is an established fact that ninety percent of startups fail. And it should also be an established fact that 90 percent of these ERC20s are going to go to zero.”

Buterin remarks come as billions pour into ICOs. However, according to the Ethereum co-founder, there are some flaws in ICOs, many of which come from the centralization issue. Although, a closed group of developers or companies funded by venture capitalists conducted ICO projects. In the current phase of development, Buterin described as “tokens 1.0.”

The market and investors should expect the majority of projects to be “very bad ideas,” says Buterin. Many of which are not viable projects, or lack working software. Several decentralized applications in the market have not raised money by conducting an ICO, he added.

The problem creates as the ICO market investors do not conduct any detailed analysis on Blockchain networks, he said.

Buterin comments on ICOs

Similarly, it is difficult for developers to create decentralized applications without ICOs. But, Buterin was optimistic towards EtherDelta’s business model:

“This, basically, is tokens 1.0. There are some good ideas, there are a lot of very bad ideas, and there’s a lot of very, very bad ideas, and quite a few scams as well. I expect that tokens 2.0 and the kinds of things that people will start building in 2018 and 2019 will generally be of substantially higher quality.

Especially once we start seeing what the consequences of the first wave of tokens are in the medium-to-longer term … What is a good role for them and what is a role that doesn’t really make sense?,” Buterin added.

Moreover, companies have already raised over $2 billion from ICOs this year. Many have raised up to $200 million by appealing to new investors. However, there are smaller projects that show more promise who are not experiencing the same level of interest.

“People talk a lot about three or four projects with $200 million ICOs and so forth but there is also the long tail of much smaller projects that often do very interesting things that we often just never end up hearing about,” he said.

However, the companies raising money via ICOS will fail to commercialize their blockchain platforms. As the ICO market matures, Buterin believes that more viable, decentralized applications will emerge on the long-term.

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