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Animats

From the article:

Crypto coins with market cap > $50M

- Scams: 81%

- Failed: 6%

- Gone dead: 5%

- Dwindling: 2.8%

- Promising: 1.8%

- Successful: 3.8%

There's a tracking site for dead coins: https://deadcoins.com

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So who is going to register f*kdcoin.com :-)

(its a dot com joke)

> Successful: 3.8%

What does this mean?

It appears very little (succeeded in hitting funding targets, posted a product roadmap and a beta deployment of a chain/platform that showed some evidence of development in the past three months) per the source. Not really sure how you could justify a notional valuation of $50m before getting to that stage...

https://medium.com/satis-group/ico-quality-development-tradi... (source for the Bloomberg graph is Satis Group, an ICO advisory firm comprised of people fired from another ICO advisory firm. It's a dog eat dog world out there...)

Not yet in one of the other categories.

Am I totally misunderstanding or do the scams mean that the founders walked away with >$50m in their pockets?

If you create 50,000 coins (or shares, or whatever), and sell one for $200, then you have a "$1 million market cap!", but you actually got $200.

For a scammer behind a coin with a $50m market cap to have walked way with $50m, they would have needed to have sold all the coins at that valuation. In some cases, this may have happened. In many others, they will have sold some coins at that valuation, and others at lower valuations as the coin collapsed. In a few cases, all the transactions may have been "wash" transactions (aka, selling a coin to yourself under a fake name), and the scammer may have received nothing.

It's hard to know how much a scammer profited without digging into it, especially in the crypto space where wash transactions are so easy to get away with.

I would say it's impossible to know unless you actually run and operate the exchange(s) through which they ran all of their 'sales'. The exchanges are often complicit in listing these coins and make money from a fee which they demand in order to list and promote them. the exchanges hold all of the real power in cryptocurrency, and there are only a handful of them.

HA! No, all crypto valuations only include the free float in the market! Check out coinmarketcap.com , the leading "valuation" site, and notice that it only counts circulating supply, no matter how small a percent it is to the total supply.

All metrics related to "crypto total market cap" are based on dubious circulating supply metrics, when the reality of this is many times higher, even though it is an accounting nightmare regardless.

Next up, most coins actually did sell all of their free float / circulating supply in exchange for a more liquid currency.

So yes, the $50million projects actually received $50m in usd/btc/eth AS WELL AS granted themselves a sliver of the new currency, akin to private equity and every share company ever.

It is double plus good, and scammers are currently walking away with that. But if they are smart, they make their new coin valuable because an even greater windfall awaits and then that means it isn't a scam project at the current threshold of legitimacy.

I don't think you really understand what "circulating supply" means. It doesn't measure how much is actually changing hands, it just measures how much theoretically could. And even at that, it's very vulnerable to manipulation.

> But if they are smart, they make their new coin valuable

Citation needed. :)

I understand what it means, it doesn't matter, that is what is counted.

Also, real people or organizations have "lost" this money, right?

whats the rate of failing for startups with >$50m valuation? Is there a tracker for that as well?

Yes. About 75% of venture-backed companies fail to return cash to investors.[1] Many of those failures are zombies - the company continues to operate, can cover its running expenses, but can't pay back its startup costs. In the ICO world, that would be considered a success.

[1] https://www.fastcompany.com/3003827/why-most-venture-backed-...

So many of them are paying people living wages, or at least had been during their lifetime. Compare that to failed or scam ICOs, which do literally 0 people any good except maybe the "founder."

Well let's not forget about all the productive hosting business this is drumming up, some poor megacorporation is barely holding on by offering their cloud hosting services to all these ICOs.

(there isn't a window fallacy we can't broken here :D)

Valuation is different than market cap.

As stated in another comment, a coin only needs to sell one unit, and because of the supply; they have a large market cap.

That's exactly what valuation is.

Ask the opposite question- rate of success for startups with >$50m valuation

IMHO, it's certainly below 3.8%

You are so wrong that I audibly laughed, even though I’m in this room by myself.

Are you saying that, if you take 100 random startups and look say 5 years later at how many survived AND are valued over 50 millions, you have more than 3?

I would like to know which distribution you sample from :-)

That’s not what your comment says. It says that the rate of success of startups which already have $50m valuations is less than 3.8%.

Then I apologies for not being clear.

What I meant to say, is that if we look at the coin graveyard, we are including 100% of the failed coins -- because ICO were heavily publicized.

If we look at the startup survival rate, we are not including 100% of the attempt. Some will consume money, but never even make a blip on the radar.

If you consider the failure rate of startups vs the failure rate of ICOs, I think ICOs show a higher success rate - and even more when you raise valuation.

Here is a more extreme example: A startup valued over 1 billion is a unicorn. An ICO valued over 1 billion is at the moment (with rock bottom prices) anything above the top 18

We can disagree on the valuation formula (fair critic), but even with that a 4% success rate >50M is nothing to sneer at.

It's possible to see failed startup if we use figures from an accelator, like say YC.

From https://blog.ycombinator.com/yc-portfolio-stats/ :

Number of YC companies worth more than $100 million: >20

Number of companies funded by YC so far: 716

Let's say 20, and use the $100 million instead of the $50M as I can't quickly find YC numbers for $50 million.

Still, 20/716 is about 2.8%

So I repeat my words: a success rate of 3.8% is wonderful.

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