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New cryptocurrencies from the investor´s perspective

6 Mar 2018,

I had been receiving questions about whether to invest in Bitcoins in the last month. Many people also have asked what I think about new cryptocurrencies. I am answering that I honestly do not know because I do not follow ICO (Initial Coin Offering). In general, I perceive them as extremely risky because we cannot see inside, and the biggest value is the trust in them, people often try to create their own cryptocurrencies, hoping to make it a new Bitcoin (it’s like buying it for $ 1). Capital is primarily acquired by crowdfunding.

According to the tokendata.io information, in the last year, there were 902 ICO. From them, 142 did not survive the crowdfunding phase, and many attempts did not get a single dollar. Another 276 did not survive end of the year. We have 418 failed ICOs, that 46% mortality in the first year. These projects got over $ 100 million last year with crowdfunding.

The other 113 ICOs are classified as “semi-failed”. So, as a project that is closed to its end. These ICOs received another $ 130 million. Perhaps there will be some exceptions between them, which will survive, but I do not believe much in it. Together with already failed ICOs, it gives 531 infamous ends (59% mortality). Others will undoubtedly come.

I would compare it to a business investor who decides to invest in a start-up whose owner is known only by name, and by fact that he aims to start a business in a sector where a small group of people emerged in the past two years and that group is dominating the market and earning big money. This is also the reason for starting his business. And just like any beginning entrepreneur in this sector, he also claims to be able to break into the elite group of people controlling the market.

Offer like that does not push me to invest. However, if someone wants to speculate towards ICO, they should keep in mind these figures and comparison with novice entrepreneurs. Personally, I would not invest more than a single unit of percents of capital.

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