The devastating effects of ICO on the Ethereum blockchain

mustymouse (32)in #cryptocurrency • 7 years ago (edited)

Part 1/?

There are many arguments for both sides of ICO and its impact on the investment and mining markets, however not many aside from node owners and wallet providers are worrying much about the effect on the blockchain itself.

MyEtherWallet and GDax know the effects of hyped ICOs thrashing their Ethereum nodes all too well, which is why both are such large proponents of folks spinning up their own to contribute to the network and help alleviate future (and present) stress.

But, there's good news, bad news, and also some slightly ugly news:

The Good

ICOs are a fantastic opportunity for the market as it makes money, which draws investors and speculators who may not otherwise be aware of the possibilities of blockchain. This in turn drives more people to try out a wallet, a node, or both and overall increases the public's knowledge about crypto. The effect is similar to that of when a a major news outlet mentions Bitcoin in a broadcast, or a celebrity wears a lovable marijuana-themed coin's apparel into North Korea.

The Bad

ICOs have a tendency to draw sketchy and conniving people out of the woodwork, on both ends. We have seen instances of currency developers running off with cash as well as malicious actors flooding the network with erroneous requests in order to simply delay legitimate transactions. This, combined with a huge amount of legitimate support can easily lead to the Ugly.

The Ugly

During the recent BAT and Status ICO, both of which accepted Ether as payment, transactions on the popular Ethereum wallet "My Ether Wallet" were delayed by several hours in some cases due to the massive amounts of transactions taking place on the network. Many people who sent investments did not get them in and as a result were not issued tokens in the ICO; wasted money on gas and no tokens to show for it.

This underscores the need for more nodes to further distribute and power the blockchain, but it also begs the question: what are ICOs really doing to the Ethereum blockchain?

#ethereum #bitcoin #ico