Status, an open source messaging platform and mobile browser to interact with decentralized applications that run on the Ethereum Network, raised over $270 million in less than three hours in yet another massive Initial Coin Offering (ICO).
This amazing amount of money invested in an app has led to more and more people from the cryptocurrency community raising their voices against what they see as bringing systematic risk to the Ethereum ecosystem.
Currently there's a 14.3k $ETH transaction backlog. All Ethereum wallets are down on @BittrexExchange and @Liqui_Exchange. thisisfine.jpg pic.twitter.com/IvJHNyLB9m
— WhalePanda (@WhalePanda) June 21, 2017
As happened during the Bancor ICO, the Ethereum network has been clogged up with the unsustainable amount of transactions straining the system at the same time, leading to a huge backlog, delays and people claiming their transactions were not carried out. In online community forums investors are also complaining that the well-connected received priority over the common investor.
Current ICO craze is out of control because people never learned their lesson with TheDAO after everyone got bailed out. Disaster incoming.😞
— Charlie Lee [LTC⚡] (@SatoshiLite) June 21, 2017
People are also concerned that since so much Ether is now concentrated around each of these projects, if any of them suffer some hack, turn out to be a fraud or just fail in any other way, the negative press will hurt the reputation of Ethereum at a time when it is gaining a lot of attention. In that case there might even be pressure on Vitalik to fork the blockchain again as has happened with The DAO.
These students are going to learn a painful, but important lesson in portfolio construction and diversification (and greed) https://t.co/zJKm5m2u8Y
— Barry Silbert (@BarrySilbert) June 21, 2017
It is true that ICOs are dramatically democratizing. However, it is also important to remember that VC funds usually have serious due diligence processes in place and would never just give $270 million away.
It is more than possible that many traders simply jumped on the Status ICO without any intention of owning the token long term and will just try to sell it at first chance to gain more ETH. If that happens the price might crash as soon as it is available on an exchange, wiping out any value they created.
(Photo: pixabay)
