[2017-10-26] Vitalik Buterin: 90% of token startups will fall

[fanatseal2]

The founder of the second most popular cryptocurrency in the world has always been skeptical about initial coin offerings, or when companies issue digital tokens to attract investment. Those digital tokens’ price is based only on the desire of people to have them, Mr. Buterin noted on the ETHWaterloo hackathon, dedicated, as one can guess from the title, to the structure of Ethereum.

As Vitalik Buterin believes, 90% of current ICO projects, even based on trusted ERC20 standard and even those listed on Coinmarketcap, will eventually crash. What we see right now is only the first version or first practical implementation of tokens, and “tokens 2.0” that will emerge somewhere between 2018 and 2019 will be much better. The hype around current token projects is doomed to fall, and after that, Buterin thinks, we all will finally understand which projects are worth investing and which are not. The ICO rating system is, indeed, one of the most serious problems the market is currently facing. But the market will mature, Ethereum founder assures.

Previously, when it became known to Buterin that independent Ethereum upgrade developers had launched an ICO, he immediately told this is not what he wants to see with his currency development and swiftly established a private fund that invests in decent Ethereum development projects.

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[senin]

I participated in many signature campaigns and can confirm that the prices for most of the coins created as a result of ICO immediately fall much as soon as they enter the exchange and start bargaining there. However, it is encouraging that in 2018-2019 a second version of the original coins will be created, which will be much better than now. Perhaps ICO will not be so much, but they will differ in functionality and quality. The news from Vitalik Buterina is encouraging.

[Iranus]

I doubt that Buterin has ever had that much faith in cryptocurrencies in general, never mind in the exact things that he's doing.  It's just a bit of an experiment which also brings an interesting method of fundraising and interesting future prospects.

It's surprising that he's stepping in to be the voice of reason during this general ICO bubble, considering that he stands to hugely financially benefit from having loads of ETH.

Perhaps that could even suggest that he expects the ETH price to become higher once the majority of projects are legitimate.

[darkangel11]

He's right in a way. The number of people willing to invest in ICOs is limited, which means the money is limited. There's so many ICOs coming up within a short period it's overwhelming when compared to the general interest in cryptocurrencies.
After some gov statements about ICOs and the issued bans people are weary and will choose established coins instead of new ones. I bet most of them will fail. They can be listed and they can be traded, but the amount of users will be insignificant.

[marckenigsberg]

Four out of five startups fail.
If we're talking about the market maturing to a point where people judge well what to invest in then I think we are aspiring to similar to the 20%.
I believe in cryptocurrency and ICO as a mechanism but based on that I think 90 is way too generous at this point.

[greeklogos]

I don't need any Buterin to say that the biggest Proventil of ICOs will never have success and the biggest percent was created for one reason - to take money from people and to close. I'm not surprised about China's banning of ICOs, I suppose that those unsuccessful end of ICOs was the exactly reason of why they took such decision.

[eckmar]

Does not take a genius to get that. I don't even know why are people still investing in ICOs. I get that It may be profitable when it hit exchange (for 15 minutes until it crash) but its a scam long term.

[Taki]

Does not take a genius to get that. I don't even know why are people still investing in ICOs. I get that It may be profitable when it hit exchange (for 15 minutes until it crash) but its a scam long term.

I am agree with you. All those projects just like a trash around us and it is really hard to find a good one. I believe there are perspective projects and it will appear many new one, but the biggest number of ICO are really just scam or simply not successful startups. Mr. Buterin didn't say us something new indeed.

[peter0425]

Does not take a genius to get that. I don't even know why are people still investing in ICOs. I get that It may be profitable when it hit exchange (for 15 minutes until it crash) but its a scam long term.

I am agree with you. All those projects just like a trash around us and it is really hard to find a good one. I believe there are perspective projects and it will appear many new one, but the biggest number of ICO are really just scam or simply not successful startups. Mr. Buterin didn't say us something new indeed.

Indeed. I can't understand why people are putting money on ICOs and then cry later on that they have been scammed. Experienced tells that most of the ICOs out there did not add value but instead just copy one another. How can you put your money if those projects are like that? Mr. Vitalik does make sense. I think he has seen enough of ICOs that he can safely concluded that almost all of them will fall. Good job Vitalik for giving us a fair warning.

[freebutcaged]

ERC20 tokens "2.0" means that people will have better tools, convincing more people to join on their ICOs and collect more money because of the new

Features, no one has the ability to change this game of coins because every one is their own authority in a decentralized network. they will eventually

Run out of fuel, if a project has a roadmap to reach a goal in a predetermined date and it fails to deliver, they will be considered failure and will crash.

Eth will not remain the #1 for ICOs, others will take it's place mate. his currency is not really his, make a wrong move to see what happens.

[ivanpoldark]

As always Vit is right. Fortunately most of the ico`s will not bring real value to their investors. It is very difficult today to weed out the good from the fade, but we must do our own due diligence, nobody will care about your money, only you.

[odolvlobo]

I think that Vitalik's 90% is a conservative estimate. I put it at 99%.

90% of the ICOs are failures from the start or outright scams, and 90% of the rest will never go anywhere.

[hatshepsut93]

ICO's will fail not because ERC20 is bad, the problem is not the tokens themselves but the networks that they represent. Most of them are not able to deliver their promises for many reasons, like lack of skill, unrealistic goals or just being plain scams - and the situation is quite similar with real world startups. So, this suggested token 2.0 system might not necessarily solve the problems with current ICO's. What is really needed is community effort for filtering obviously bad projects on early stage, so investors will have to spend less time looking for good projects. Also, ICO's are in bubble because people are speculating on them - they are not buying tokens because they believe in projects, they buy them to sell a few weeks later after expected pump.

[gregall]

I think things will happen naturally. There will be regulation brought in and standards will be established. There's already other blockchains better than ethereum out there.

[jekjekman]

A statement from an alt coin creator stating that 90% of alt coin will fall.

That only means that even the coin that he develop has a chance of falling in the future.
How can we be sure that the one that he created will be strong enough not to be included in that 90%?
Ethereum might have a value right now but who knows what will happen in the future.

Is he trying to say that it will be better just to invest on bitcoin?

[BLAST2MARS]

Maybe it could be 99%. If you noticed, there are many ICO that have the same qualities and they are just competing with each other to stay longer and be the best.

[marckenigsberg]

I saw a comment from Lopp not to believe in any token that has a limited use case.
As in the only place to spend the token is in the intended ICO system.
I get the comment but this also feels against the basics of tokenomics.
And If we agree that payments is not the only use case for cryptocurrency then this seems kind of counter productive.
I love Bitcoin but I think other tokens and use cases need to develop.
Thoughts?

[rainangel7]

ICO's will fail not because ERC20 is bad, the problem is not the tokens themselves but the networks that they represent. Most of them are not able to deliver their promises for many reasons, like lack of skill, unrealistic goals or just being plain scams - and the situation is quite similar with real world startups. So, this suggested token 2.0 system might not necessarily solve the problems with current ICO's. What is really needed is community effort for filtering obviously bad projects on early stage, so investors will have to spend less time looking for good projects. Also, ICO's are in bubble because people are speculating on them - they are not buying tokens because they believe in projects, they buy them to sell a few weeks later after expected pump.

just this.

[KingScorpio]

The founder of the second most popular cryptocurrency in the world has always been skeptical about initial coin offerings, or when companies issue digital tokens to attract investment. Those digital tokens’ price is based only on the desire of people to have them, Mr. Buterin noted on the ETHWaterloo hackathon, dedicated, as one can guess from the title, to the structure of Ethereum.

As Vitalik Buterin believes, 90% of current ICO projects, even based on trusted ERC20 standard and even those listed on Coinmarketcap, will eventually crash. What we see right now is only the first version or first practical implementation of tokens, and “tokens 2.0” that will emerge somewhere between 2018 and 2019 will be much better. The hype around current token projects is doomed to fall, and after that, Buterin thinks, we all will finally understand which projects are worth investing and which are not. The ICO rating system is, indeed, one of the most serious problems the market is currently facing. But the market will mature, Ethereum founder assures.

Previously, when it became known to Buterin that independent Ethereum upgrade developers had launched an ICO, he immediately told this is not what he wants to see with his currency development and swiftly established a private fund that invests in decent Ethereum development projects.

Read more

the problem also lies in some sort of pyramid scheme via mass media attention

coinmarketcap systematically keeps a pyramid style structure alive, people that have created altcoins will have to create their own information channels and depictions where the odds are complete vice versa,

that is the only way they can create a new reality, because the established coins will systematically keep attention away from others in order to continue to grow themselves.

there are in the meantime also alternative smaller ethereum lots of alternative bitcoins etc. as i said media attention is the issue, if the coinstartups are smart they simply will stop participating in the established market and found an own market on themselves.

pretended simulated facts this way can quickly become true facts that can be measured.

regards

[Mr.Pro]

Crypto is still an emerging market and i agree that we will mature and thats why governments have been banning the use of ICO to fill their pockets and most of this ICO they dont have any idea about blockchain etc.