Blockstack CEO: Crypto Winter is Here But the Next Wave Will be Massive
Since the introduction of blockchain in 2008, there have been more than 80,000 digital ledger technology projects launched around the world. In 2016, a total of 29 crypto projects raised over $6 billion via tokenized crowdfunding (ICO). The next year, 871 ICOs raised a whopping $6 billion, causing a wave of investment into the blockchain space. And in 2018 – this year – over 800 ICOs have announced their blockchain products.But a “crypto winter” may end up freezing a majority of them to death, believes Muneeb Ali.Decline in FundingThe chief operating officer of Blockstack, a blockchain platform itself, said that funding into digital ledger startups had gone down. He indicated that due to a shocking majority of ICO projects failing to deliver a blockchain product, the confidence among investors has come to an all-time low. As a result, it could impact even good plans for meeting their funding goals.“No need to deny or downplay it. Funding will likely dry up, we might start seeing projects shut down,” tweeted Ali.2018 has been one of the worst years for the cryptocurrency market. Almost every crypto-asset has posted humongous losses which include top coins like Bitcoin, Ethereum and Ripple. The market blames the ICO projects for the damages, stating that ICOs accumulated the leading cryptocurrencies from investors to develop their blockchain platforms. But, in the end, a majority of them failed to deliver the product, or just fell behind their promised roadmap. In the meantime, they kept dumping the accumulated crypto funds for fiat money, increasing supply against a weaker demand.The death of many blockchain projects could be good news for the crypto market in the long run, Ali said.The Blockstack executive said that the current phase of the crypto market is similar to the “dial-up era” of the internet. There was a substantial likelihood of failures, impractical ideas, and hype-driven investment which – now – is on its way down as the funding declines. Investors are becoming smarter, and would likely put their capital in projects that are well-backed and driven from practicalities of the blockchain.A New BeginningIt can be confirmed by comparing the total number of blockchain ICOs launched this year and how many among them met their funding goals. Cryptocurrency data firm ICORating found that funding into blockchain startups raised from $3.3 billion to $5.5 billion between first and second fiscal quarters. Even then, only a small number of ICOs were able to raise funds, while the rest of them were abject failures.It proved that investors continued to believe in the potential of blockchain technology, but they trusted only a few teams with its development.“It’s far from the end, however. The next wave can reach a bigger market, beyond this “dial-up era” of crypto,” stated Ali.