Eddy Travia Speaks at Blockchain Venture Summit: ICOs – Facts, Fiction & Future
The Blockchain Venture Summit in Istanbul was proud to welcome Eddy Travia, co-founder of Coinsilium to the stage, to talk about ICOs. He gave delegates a fascinating history of his own interest in the space, followed by an overview of the challenges that ICOs now face and some interesting predictions for the next 12 months. Let’s have a look at the rundown of events.
Coinsilium & ICO History
Travia founded Coinsilium through networking. Following the economic crisis in Cyprus in 2013, in which the government started taking money from its citizens, interest in Bitcoin and crypto boomed, and Travia started organizing conferences, such as the Bitcoin Singapore conference in 2013. Through this, he learned of a new wave of startups (including Coinbase) and decided to found a company that focused on venture investing and help and advice for these new ICOs. Some of Coinsilium’s early investments included:
- Factom – which started out focusing on mortgages
- RSK (The first company to offer open-source smart contracts between Ethereum and BTC)
- Indorse (Like a blockchain LinkedIn – a decentralized, professional social network)
Eddy Travia at BVS, 2018
Around this time, blockchain started to be referred to as a “foundation technology”, and this is when the mood changed and companies started investing heavily in blockchain talent. This included wallets and exchanges, and later data security and smart contracts. It was when First Blood raised several million in a short space of time that heads were turned and ICOs truly exploded. Cosmos raised $17m in 9 minutes, Golem raised $8.6m in 2 hours and there was a total of $240m raised in 2016, rising to over $6bn in 2017. The total market cap exploded in 2017 and the rise of these altcoins meant that the market cap gap to BTC was closed significantly.
- There was frustration that investors needed educating every time. So, entrepreneurs started to turn to the crypto community for easier investments options
- There is limited capital on offer from single, large investors, so it became easier to raise millions through this type of funding
The Main Features of Token Sales
- Tokens are not shares
- Tokens enable users to access a platform
- No need to demonstrate an existing revenue stream (although it is good to have an MDP)
- Legal and listing costs are rising
- Nearly immediate liquidity of the tokens (as opposed to crowdfuning)
- Development of an ecosystem
Challenges for Entrepreneurs
Travia spoke of the following:
- Security risks (hacks, fakes)
- Legal pressures
- Focus on the token generation event can distract from the actual product development
- An ICO turns a company into a public company immediately and teams are unprepared for this level of scrutinty
- Token price can distract from startup goals
Challenges for Investors
The challenges for investors have begun to mount up too. They must now consider token value, the clarity of the project, and of course, the external environment; governance, pending regulations from governments, media scrutiny, and, of course, the same security risks that plague entrepreneurs themselves. These considerations make investing in ICOs tricky. This is in addition to the fact that 86% of companies failed from the IPO (Dotcom) boom. Travia believes that this could be an indication of future success rates in the ICO world.
Travia’s Predictions for the Next 12 Months
Travia concluded with his predictions for 2018 going into 2019.
- ICOs will grow but more will fail as investors become more discerning.
- There will be new tools for governance and comprehensive regulatory frameworks.
- We will see the first mergers and acquisitions, as struggling ICOs and startups are bought out by others.
And Travia’s prediction for the total amount raised in 2018?
Which of these predictions do you think will come true? Leave us your thoughts in the comments section.