Will we see ICO's fade and forks take over?

ICO's are under a great deal of scrutiny lately - for good reason. It really doesn't take much to make off with a great deal of money - develop a token that sounds good on paper, get some buzz going, put out a nice looking road map, launch the ICO... and fail. Whoops! Sorry, it didn't work out! Thanks for the money!

Alright, it's not quite that simple, but pretty close. Day after day, we witness ICO's with white papers and road maps of various degrees of quality. It is a pretty major risk to put your hard earned cryptocurrency into these projects of dubious quality. The pay-off can be great, of course, which is what draws investors into these risks.

But more often lately, these ICO's just don't pan out. Millions of dollars can be raised and vanish just as quickly into the pockets of these so-called developers. It's no wonder regulators want to step in and stop the bleeding. In Gibraltar today, the drafting of ICO regulatory laws was announced. For more details on these laws, check out this article. In Russia today, it was announced that ICO token issuers will be required to already have investment commitments of about $1.7 million in capital along with numerous compliance regulations just to begin fundraising through token sales (see this article for details).

So it could be that the ICO gold rush may be coming to an end. Only serious projects with previous investment commitments will even be feasible with all of this regulatory pressure. Unfortunately, some smaller projects that simply can't raise millions in support before launching may never get to see the light of day.

So what's a get-rich-quick schemer to do in light of all these regulations?

Fork!

Forking of Bitcoin and other currencies is growing rapidly. This would avoid all the nasty regulatory problems of ICO's and have a built-in market of currency holders from the coin of which a given fork is created. The currency could then be modified as needed to appeal to project investors and buyers.

We are witnessing a boom in forks this year. Bitcoin alone has well over 30 forks in the works. Some forks are designed as scams to get you to hand over already-existing currencies while others are legitimate projects that are attempting to solve problems with current coins through forking and subsequently modifying further. Of course, for every Bitcoin Cash, Stellar Lumens, or Verge (currencies that began their existence as forks of other currencies), there are pump and dump scams and a bunch of failed forks that just didn't take off.

The thing about forks is, there just isn't near as much risk as an ICO. Sure, early buyers might still put in more than they get in return, but most users will likely, at first, be those who received the coin through the forking process and really don't have much to lose by trading the newly issued currency. With ICO's, that initial money could just walk away in the first place.

It will be interesting to see how governments around the world attack the problem of ICO's. In an ideal world with a truly free market, where "buyer beware" rules apply, failed and successful ICO's would be sorted through the natural evolution of traders becoming more savvy and discerning over time, thus filtering out weak projects and supporting good ones. This might not happen simply because governments may interfere in this more natural process. So while the government may protect investors from losses in some cases, they may also discourage innovation and growth from smaller projects that have solid credentials but just don't have the capital to get things going.

Here's the thing - we're not completely guilt-free here - as long as people keep spending money recklessly on ill-conceived projects without doing any kind of research, we are a part of the problem. It's up to us to look a little more carefully and use some discernment when deciding where our money should go.

In the meantime, expect to see a growth in forks and a decline in ICO's in the future (of course, it will take some time before we see this shift). Forks may become the only way for some of these smaller innovators to get the ball rolling.

*This is not professional trading advice - it's just my opinion!

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sources:
http://www.newsbtc.com/2017/09/15/floyd-mayweather-promotes-yet-another-ico-amid-global-crackdown/
https://cointelegraph.com/news/gibraltar-to-introduce-worlds-first-ico-regulations
https://cointelegraph.com/news/russia-ministry-of-communications-requires-ico-issuers-to-have-17-mln-nominal-capital