The big news in cryptoland in 2017 was the rise of the Initial Coin Offering.

The knowledge that something like this could be possible dates back to the early years of Bitcoin, but the dawning of the reality was quite awesome to behold. Anyone with an entrepreneurial idea could float a token and invite people to invest. The investment vehicle was not a broker or bank but a distributed platform that connect buyers and sellers. What they got in return was not a stock or share in the profits but the rising value of the token itself. It’s a highly liquid stake in a protocol. Small businesses, churches, schools, websites, and charities of all sorts could raise money this way.

Most importantly, the ICO illustrated the hope that anyone could be involved in both soliciting and investing in enterprise while bypassing the hugely regulated, bureaucratized, and impenetrable apparatus of traditional financial markets, including rarified venture capital funding. It seemed like we were watching a beautiful future unfold, the democratization of investment and fundraising. The possibilities are without limit. We’ve never seen anything like it in the history of finance.

This year, matters have been different.

• Only 7% of ICOs from Q2 have been able to secure listings;
• 55% of all ICOs from this period failed to hit their funding target;
• 15% of projects already had a working business, versus 6% in Q1, and whether or not this was the case had no effect on fundraising success.

So I decided to take a closer look at the very detailed report being cited here. The actual facts show a different picture that do indeed point to long-run success, even if the markets seem rather stalled at this moment. What we see is a spectacular increase if looked at year-over-year. In 2018, compared with a year earlier, the report finds the that ICO market has more than doubled. Collectively, ICOs of 2018 have already raised $11,690,981,663 of investments, which is 10 times bigger than the cumulative sum of investments from ICOs of Q1-2 2017. Excluding EOS, the cumulative amount of funding received from ICOs of Q1-2 2018 is 6.4 times bigger than the one of Q1-2 2017.

The total amount raised in the second quarter of 2018 is: $8.4 billion dollars. That doesn’t sound like a dead market to me. It’s true that half the new ICOs in the second quarter were unable to raise more than $100K in funding. But this suggests a downgrade in the quality of listings. That is no surprise to anyone who has watched this sector over several years. A market with virtually no barriers to entry for upstarts is going to attract…well, just about anyone. It’s for this reason that only 7% of new tokens have managed to obtain listing on established crypto exchanges. But judging by that standard is an extremely high bar. The exchanges are listing thousands of tokens, and even people who obsessively follow this space have to admit that they can no longer keep up with the volume, variety, and frequency of listings.

It’s too much for anyone.

In that same vein, 55% of all ICOS in Q2 2018 failed to complete crowdfunding. But that is only 5% more than the first quarter, and this is in a period of notable pullback in the markets. And also note that there was an 11% increase in the quantity of projects choosing this funding route.

The report further says:

On average, the top projects for Q2 raised 50 million USD. Only 3 mentioned projects attracted all their funds in the course of 1 day. On average, these projects raised their money within 63 days (the average campaign duration time is the same as in Q1, but there is an evident tendency for an increase, at least by 10%). Compared with Q1, the number of projects offering tokens with service characteristics decreased by 24%. The share of projects that offer security tokens decreased by 8%. The number of projects with utility tokens increased by 32%.

What about geography? Despite all the talk of crypto-utopias being set up in far-away lands, North America is still king of the ICO, with 64.7% of all funding attracted. Second is line is the Singapore, then UK, and then Switzerland. Asia showed an increase in funding but a decrease in the number of new projects. In terms of sheer numbers of business registrations of high-value tokens, the geography is very different: Malta, Gibraltar, and Singapore rank as the top three. “We attribute this to an openness to blockchain projects and the legal changes enacted by financial authorities in Malta and Gibraltar,” says the report.

Keep in mind that all this happened despite true setbacks in the markets as a whole. The median return on tokens in the second quarter was a dismal -55%. The average number of investors per token was 7,871, showing what a truly thin market we are really talking about. The great exceptions to the general pattern were Telegram (a communications platform) and EOS, which sports a new governance model for decentralized applications.

The least successful ICOs were cryptocurrencies. In that sense, Q2 was the quarter of burnout on this asset. We have more than enough monies, markets seem to be saying. The success leaders were service and utility tokens, which is to say protocol assets not designed for monetary exchange but rather assets backed by new services that exist apart from their fundraising potential. What industries are we talking about? “Following Q1 trends, the most popular industries with the largest number of projects were finance, gaming, and infrastructure. The number of gaming projects doubled compared with Q1.”

In general, the report has vastly more information and detail than any normal person would ever need to evaluate this new sector of financial life. What it all points to is precisely what many of us came to believe in 2017. Something truly spectacular is taking place that could change finance, investment, and entrepreneurial innovation forever. So why the long faces? It has something to do with the short-term temperament of the investor community as it developed in 2017. This community became addicted to extremely high returns, fast progress, and the belief that everything was changing much sooner rather than later.

History shows a different reality. Railroads in the 19th century had a long and rough start, and the markets were replete with frauds, mishaps, booms and busts, and hence skepticism. The internal combustion engine for tractors took a whole generation to be widely adopted. Internet commerce experienced a spectacular bust in 1999 that traumatized a generation of investors, and we are only now seeing that anti-digital bias fade from people of a certain age. In the end, crypto markets can’t be about this quarter’s prices, this year’s high-flying coins, or this or that company’s fate. The confidence that one has in crypto traces to a conviction concerning the technology itself and what it can and is doing for the well-being of the human experience.