In 2017, the world hit a fever pitch with ICOs; a concept that was only three years old had taken the crypto internet by storm.
From the outset, the initial coin offering (ICO) as a concept was beautiful. It took away the barriers to invest for the average person. It enabled anyone to support not only startups and open source projects but, for the first time, protocols. The problem was that almost all the temporary glitch moonshot returns that made headlines came from the pure speculation of the token during an internet mania. None of the returns came from real business success through robust business models. If you add in sneaky cabals and VCs that would buy up pre-public offering tokens on the cheap and then openly dump them on retail investors, you get the full “Wolf of Wall Street” scenario.
The collapse of the ICO mania taught many first-time investors some powerful lessons in looking for real businesses. Don’t merely trust glossy marketing with no code down and no proof of product-market fit. Most of all, don’t be the last fool to buy into the hype.
ICOs, Open-Source Protocols and “Shitcoins”
The collapse of the ICO market also helped solidify the term “shitcoin.”
Historically, the vast majority of open-source projects have generally found it hard to raise capital due to a deficiency of revenue streams. When it comes to protocol development, it’s even worse. For example, Bob Kahn, along with Vint Cerf, invented the Transmission Control Protocol (TCP) and the Internet Protocol (IP). Both men won many awards for being the fathers of the internet, but neither of them has become wealthy from their invention, and that protocol is probably the most notable one in the world.