Many have voiced their concerns about the effect of rise of ICOs on the price of Ether. Significant sell pressure has risen as large amounts of Ether are being raised and sold to fund projects.
For example, since the beginning of ICO’s year long token sale, one ICO heavyweight has raised over $500 million in Ether. Even though the rates are hard to accept this can cause increase in price of Ethereum in future.
Good in the long term
Good ICOs can pull more attention to the Ethereum Blockchain by providing funding for influential projects that encourage cross-industry collaboration. Many industries are planning to use Blockchain for which ICOs provide necessary funding. The Blockchain can be used relatively risk free by established companies and startups.Many industries are keenly interested in implementing Ethereum.
Egor Gurjef, The CEO of a cloud gaming platform, commented that,
“Ethereum provides appealing smart contract and payment options for a lot of industries. I think the gaming industry is no different. ICOs are a great way for companies to get involved with Ethereum without too much risk.”
To add value to Ethereum, exposure to cross industry is essential. Demand for Ether by way of transaction fees is created on how widely the Ethereum-based tokens ERC20 are used. As the usage and number of tokens increase ,demand for Ether also increases.
Effects of regulation
A bad ICO can fail to deliver a product by accepting Ether and dumping it on the market. Therefore strict regulations are required to avoid an unregulated new market, carefully monitored by authorities to obtain more legitimate projects.
Through regulation,every issue with ICOs cannot be solved. The value of Ether can go down even when company responsibly funds their project. Even locking up a percentage of ICO funds for a certain amount of time cannot help solve the problem.
The drop in value of Ether for a short time can be complimented by the invaluable long term value of successful projects. Hence, future for Ethereum remains intact as it’s collaborated with many different industries.