Most Cryptocurrency Is Pure Garbage (but Blockchain Is Fine): Study

According to a new study, around 81 percent of the cryptocurrencies introduced in 2017 were total BS. Luckily, this doesn’t affect the evolution of blockchain all that much.

ICO (Initial Coin Offering) advisory firm Satis Group conducted the study, which found 11 percent of the $12 billion (real dollars) raised via ICOs in 2017 went to fraudulent cryptocurrency. It considers a cryptocurrency a “scam” when the community sees it as such, or those responsible for the ICO have no plan to follow their own roadmap post-ICO.

Of the 11 percent ($1.3 billion) that went to ‘scam’ cryptocurrency, most went to three projects. Pincoin raked in $660 million, Arisebank gathered $600 million, and Savedroid scored $50 million from backers in 2017.

The study analyzed over 1,500 cryptocurrencies. Satis Group discovered only about half of them were built on existing blockchain technology (which is deemed a ‘token,’ as a new platform doesn’t exist; it’s like signing up for a cellular provider that uses the network of a larger one such as Verizon). Without a “genesis block,” or initial block in the chain, a token can’t be a true “coin,” and thus can’t truly control its network or technology stack. The study doesn’t say as much, but this method is a quick way to spin up scam coins without much investment.

Furthermore, the study says Ethereum was the most prolific blockchain platform, with 86 percent of coins. Waves has 2.9 percent, and NEO checked in at 2.3 percent.

In a Dice survey from May, 24 percent of tech pros said they believed cryptocurrency was simply proof-of-concept for blockchain. Corporations seem to concur; for example, the HTC Exodus is a smartphone that will rely on blockchain technology for just about everything software-related. In theory, blockchain could power everything from “decentralized apps” to smart contracts to foolproof record-keeping.

According to the survey, some 22 percent of tech pros think crypto and blockchain are “nonsense,” while 12 percent are on the fence. Another 42 percent think cryptocurrency is the “future of money,” which is a shadow-endorsement of blockchain, as well. While our survey shows most tech pros have a favorable view of the two technologies, over one-third have serious doubts about long-term viability. ‘Scam’ ICOs won’t help that perception.

In analyzing Dice’s jobs dataset, we found that when Bitcoin valuation dips dramatically, so does blockchain job availability. Similarly, when Bitcoin is more valuable, blockchain jobs increase. We attribute this to tech companies shifting gears to a hot new thing, even if they don’t fully understand how it works.

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