A big graveyard is getting built in the virtual cryptocurrency world. In July, there were reports about more than 800 cryptocurrencies being declared dead, and a new report suggests that nearly 50 per cent of all initial coin offerings (ICOs) in 2017 and 2018 have failed to raise a single dollar. (See also, Crypto Carnage: Over 800 Cryptocurrencies Are Dead.)

ROI Falls Within Weeks of ICO

The study was conducted by research and consulting firm GreySpark Partners, reports CoinDesk. It covered the ICO market across the past several years and found that the bulk of ICOs were launched starting 2017. Among more than 1,900 ICOs covered in the report, findings suggest that as many as 890 token sales did not raise any money at all. Around 733 ICOs managed to collect capital in excess of $1 million, and only 12 among those surpassed the $100 million mark. EOS and Telegram remain the only two billion-dollar ICO babies with the former raising $4.23 billion and the latter securing $1.7 billion. Dragon Coins, Hdac, Filecoin and Tezos managed to raise funds in the range of $0.32 billion to $0.23 billion, according to the report.

The report also quotes that the percentage of ICO projects showing positive returns significantly declines within weeks after the ICO exercise. (See also, Over Half of ICOs Die in First Four Months: Study.)

Lack of interest and necessary traction, disappointing product developments, the possibility of scams, challenges in execution, no existence or decline of a suitable market, and poor marketing or go-to-market strategy are quoted as some of the major reasons for cryptocurrency project failures leading to a declined return on investments (ROI) from ICOs. (See also, How to Identify Cryptocurrency and ICO Scams.)

With almost 86 percent share, Ethereum emerged as a clear leader for the choice of blockchain platform to launch crypto tokens. It was followed by Omni (9.4 percent), NEO (3.07 percent) and others (1.55 percent).

The study used data from ICOData.io and ICO-Check.com, and covers ICOs from 2014 to August 2018.

Investing in cryptocurrencies and Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns no cryptocurrencies.