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During one of the biggest Ethereum hackathons, ETHWaterloo, the founder of Ethereum, Vitalik Buterin, shared his views on the current situation with tokens and ICOs.
Buterin compared the potential fail of 90% of all ICOs, or initial coin offerings, with the 90% fail rate of startups. In his opinion, it is inevitable that a large amount of the ERC20s will “go to zero”.
The opinion of Vitalik comes at a time when the approximate number of all cryptocurrencies is around 1,000. With investors around the world distributing large parts of their portfolio to different digital currencies, and with the decentralization in the financial markets, the prediction made by Buterin is rather interesting to consider.
Vitalik said that the new future of tokens will be what he calls “tokens 2.0”, which will be much better than token 1.0, after experimentation with tokens is over, signaling a much higher quality in the token’s landscape than currently available.
According to Jordan Daniell from ETH News:
“Moreover, Buterin seems to believe a certain amount of maturity will be gained once tokens1.0 has run its course and disposed of the hype surrounding token price discovery.”
Vitalik went on to explain the current flaws of tokens, as reported by Daniell (ETH News):
“I think part of this actually comes from the fact that these tokens don’t have sensible valuation models. Basically, if you try to economically model the idea of tokens being valuable as a medium of exchange, you start to realize that it’s a very multi-equilibrium game. Basically, tokens maintain their value if people want to hold them. In general, when you have a new industry and you have this early stage 1.0 period, lots of people try different things, and lots of people try lots of things that just make no sense whatsoever. After some time, the market does mature … I personally do think it is coming but there is going to be a process involved in getting there.”
Vitalik previously gave another interview on the future of ICOs, when he said that receiving funds and capital via ICOs will be harder in the future.
With Ethereum finding numerous applications in multiple industries, from real estate to healthcare, the future of it and the overall future of the tokens’ market is of extreme importance to the further decentralization of the financial world.