The behaviour of the cryptocurrency market in the past few weeks has raised a lot of anxiety among investors who panic at the huge swings in the price of Bitcoin and other altcoins.
Why are investors anxious?
The anxiety that is prevalent within the cryptocurrency market may not be primarily as a result of the swings. Rather, investors seem to be uncomfortable with the absence of any form of regulation for ICOs. These ICOs have been blamed majorly for the recent slide in price of Bitcoin and other altcoins.
The dominant opinion for the recent slide in price is due to the huge sell-off of mainly accumulated ETH tokens by major startups who had acquired such tokens from concluded ICOs.
The impression therefore is that any individual or group may decide to launch a product, organize an ICO, raise funds and do whatever they like with the money without any obligations. Apparently, this leaves investors totally at the mercy of organizers of the ICO, having no tangible protection from loss.
How important is ICO?
The importance of ICOs to the blockchain industry makes is necessary for there to be a more organized atmosphere than what is currently obtained.
Blockchain Evangelist/Technologist, Melvin Petties notes that for better or worse, ICOs are extremely important. Unlike crowdfunding, positions can be swapped in and out which is remarkable for reasons such that token issuers/product originators benefit directly from the secondary market.
This attribute of ICOs allows issuers to see in real-time how well their project is being accepted in the community, but also to directly benefit from any positive movement going forward. It would be like creating an old-school arcade game that accepts quarters/tokens that change in price based on how badly people want to ‘play the game’. Arcades and game producers would have loved that!
Bad players within the industry
With the litany of unclear terms and conditions across the industry, or rather terms and conditions that completely exonerates ICO vendors from any form of obligation or responsibility, Petties considers such an unsustainable system going forward.
“For instance, the terms of service and purchase language in the EOS token is really quite awful. You are not guaranteed anything with your token purchase”.
He continues by noting that with EOS you are paying for a chance that they might come through with some software and might honor their agreement to swap out your EOS for tokens on the new platform.
A lot of kickstarters/crowdfund services ran off with people’s money and the projects never rewarded people e.g, PLASTC, a recent one that went bankrupt. Raised a bunch of pre-order money and went belly up.
Plastc did not just ask for donations towards the development of its universal credit card. The company took pre-orders for the card in the range of $135 to $155 a pop. (Reports claim it had amassed $9 million worth of pre-orders from 80,000 people). Unlike the recently failed Lily Drone, Plastc has not offered its pre-order customers a refund. The company went so far as to delete its social media accounts.
Absolute decentralization or Regulation?
Regulation in any form within the crypto world has been an issue of debate, especially since the technology is adjudged to be decentralized, some participants insist that any form of regulation would imply a deviation from the original intention of Satoshi Nakamoto.
Therefore, the seesaw hangs on the fulcrum of remaining fully decentralized, without any form of regulation OR;
Introducing rules that will protect investors from the risk of losing their money while relinquishing the absolute freedom of a decentralized community.
Petties thinks that ICO regulation is imminent, considering how the ecosystem is unfolding.
Petties says to TTMNews:
“I think ICO regulation is imminent, especially in the US. I think how it is done will dictate which jurisdictions rake in cash and which ones don’t. There is already a framework that supports Kickstarters and Crowdfunding, so any token that cannot be exchanged 1:1 for a good or service should fall into that category. So regulation will just work to simplify/classify how ICOs should be grouped and labeled so that people know what they are buying”.
Considering the trend of events around ICOs and how a number of them have not lived up to expectations, it may not come as a surprise if we begin to see some form of regulation in the near future.
Apparently, every investor appreciates an environment where assets are protected, or at least where certain level of guarantees are provided