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Ernst & Young: Initial Coin Offering Forecast is Not Good

A report issued on the 19th of October by Ernst & Young (E&Y), one of the Big Four accounting firms is an evaluation of the progress of initial coin offerings after a year of raising capital.


 

The report has found that ICOs, after a year of full action, lack the fundamentals that inspire confidence in business transactions.

E&Y’s report is a years-long study of the samples that first started in December 2017; their samples include more than 141 high-functioning ICOs that represent the market’s lion share.

The class has yet a lot to learn, according to the report, 86% of the project coins are under the listing price, just a year later, 30% are emptied of their value which in turn means that participating investors have waved goodbye to 66% of their investment value.

Issues

A major conundrum facing initial coin offerings, as stated in the report, is stabilizing utility coins as a viable payment method while simultaneously keeping the interest of potential investors.

When it comes to prototypes and product dev, the auditor saw that just over 70% of projects have zero market offering while 29% had grown only 15% since last year.

However, there are seven projects that deal with fiat currencies next to their original tokens, which E&Y believes that these independent projects result in the collective value reduction of investor tokens. E&Y reported that there’s one project that has entirely relinquished dealing in tokens which sofe-pedals tokens’ job; fiat currencies offer benefits for token users, but users don’t store tokens, they have to buy the required amount and expose themselves to the risks and transaction costs involved.

E&Y argues that out of all initial coin offerings, only ten in the blockchain infrastructure category have seen gains, which has not done enough to counter the absolute sovereignty of Ethereum.

A cloud of gloom hovered over Paul Brody’s interview with The Globe and Mail. Brody, - E&Y’s progress leader for BC said that the forecast is worse than what had been imagined and, in an ironic comparison with internet startups in the nineties, Brody said that at least they had an actual product unlike the current situation.

Ethereum’s market share is almost 90% which crowns it as the leading platform of token issuance and exposes other initial coin offering projects to altcoin’s losses, as reported in September 2018.

It’s argued that one of the contributing factors of Ethereum’s price-drop in 2018 is internal and it’s caused by the developers of initial coin offering due to spending their Ethereum holdings on their own product development.

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