The more complex a topic, the greater the danger that generalisations emerge that only partially depict the real situation. This also applies to blockchain projects and their financing via ICO. A central problem here is the lack of differentiation between blockchain ecosystem platforms (starting at the protocol layer) and token service platforms (starting at the application layer). Why Shitcoins, which are used on service platforms, hardly play a role anymore and ecosystems like Ethereum, Stellar or NEO are more important than ever.
Typical generalizations regarding crypto currencies and ICOs can be heard and read as follows:
- ICOs have failed altogether
- Tokens make no sense
- There is a lack of business cases
Some of these statements may also be true. The problem is only that they refer to certain parts, areas or companies of the crypto economy. In concrete terms, these statements are primarily based on ICOs or token projects, which have come up with services based on the ERC20 token from Ethereum, without having a substantial token concept. The mindset: “Tokens at any price. Business case and community added value then come by themselves,” has led to this image damage, which has shaped the image outside the crypto scene.
What is the real value of shitcoins?
As much as the many ERC20 token platforms are often used, it should not be forgotten that they make up only a very small part of the crypto market capitalization. If you look at the top 30 coins by market capitalization, you will notice that the proportion of “independent” ecosystem platforms is enormous. The further one scrolls down the ranking table by market capitalization, the fewer ecosystems and native blockchain tokens one finds at the other end of the crypto food chain. The classic ERC20 token, which was born in the ICO hype, makes up only a small part of the current $120 billion market capitalization. It is estimated that we are in a much smaller percentage range here than we were a year ago. Conversely, this means that most of the capital is invested in more innovative and serious projects.
The same applies to scam ICOs. No matter how many scrap or even fraud ICOs there were in the past: Only a few, with a few exceptions at the beginning of the ICO hype (e.g. Bitconnect), have really collected a lot of capital. The typical scam ICO is practically dead or the sums collected here are now negligible.
Ecosystem first, Application second
However, it would now be wrong to condemn applications or services that are based on an ecosystem platform such as Ethereum, EOS or NEO. After all, these are the final use cases for the emergence of a crypto-economy. The only problem is that these crypto services are based on a foundation that has so far been too weak. After all, a house should not be built in a swamp, but on a solid foundation. However, this very foundation is not yet sufficiently available. Among other things, usability, scaling and interfaces are lacking. The consequences are service tokens that, apart from the often inadequate business case, make no sense. We have been experiencing the result for over a year in the form of the bear market and a slow bleeding out of these many hopeless projects.
But this also means that it is all the more important for Ethereum & Co. to develop further. The Ethereum Constantinople Hard Fork will take place with the 7,280,000 block, i.e. probably on February 27. Together with Casper and Sharding, it is taking exactly the right steps. This groundwork increases the probability that in the future applications will also be seen whose commercial use is not limited to gambling dApps. Even if the current technological advances, such as in the area of second-layer solutions, blockchain identity or reputation systems, are positive, this development will only be received to a limited extent by the crypto market. Decentralized ecosystems cannot be created overnight. The expectations of blockchain technology are not too high, but the belief that the ideas can be implemented within a few months.