The latest oversimplification of the story around initial coin offerings, or ICOs, is that the venture capital industry might eventually find itself replaced by this hot new form of cryptocurrency-based fundraising.

As much as ICOs are a fascinating innovation, as are the blockchain technologies enabling them, the idea that they will replace venture capital is a myth.

Like most myths, there is some truth to it. As of early June, blockchain-related startups have raised $327 million through ICOs, more than the $295 million blockchain entrepreneurs have raised through VC funding, according to CoinDesk.

And some VCs have been testing the idea of raising funds themselves with ICOs. At a recent CB Insights panel, Satya Patel, cofounder of seed-stage venture firm Homebrew, floated the idea of raising the firm’s next fund in an ICO, saying it had even been discussed among the partners.

Liquidity is a big advantage in ICOs. Venture investments can be tied up for years before seeing a return, while markets in bitcoin, ether and other cryptocurrencies allow for immediate trades of any currency purchased in an ICO.

But the narrative, at least for now, ends there.

The most successful ICOs have been tied to an influential VC: Tezos and Bancor, two of the biggest ICOs yet, were backed by legendary investor Tim Draper, and Mark Cuban recently said he would participate in Unikrn’s ICO, which lends it some celebrity cred.

Those are just two of the most high-profile examples. A number of other VCs have stepped into the space, including San Francisco venture firm Blockchain Capital (which was behind the BCAP ICO, which raised $10 million in six hours) and Andreessen Horowitz and Union Square Ventures (which put $10 million into Polychain).

This suggests that rather than replacing VCs, ICOs could actually be benefitting greatly from being affiliated with them. There are few validation agents currently in place to lend credibility to ICOs; VCs could be filling that gap.

Perhaps other entities much like independent rating agencies will emerge for ICOs, assuming the market sustains itself and continues to grow. For now, the crypto-fundraising concept is so new that having a respected entity involved goes a long way to reassuring investors.

Of course, we are seeing instances where this validation doesn’t necessarily have to come from a VC. For instance, it probably helped web browser firm Brave’s ICO that its founder was the Mozilla Foundation’s former CEO.

Until the ICO market becomes big enough to be regulated and independently analyzed, it is vulnerable to scams. Criminals have been using a product page and an ethereum address to solicit money from the unwary with little risk of being held accountable.

We have robust laws to protect investors from harm, but we lack effective enforcement tools, as many of those who abuse the system are anonymous and likely overseas.

We have also seen a problem with technically competent people preselling tokens without firm plans to release a marketable product on any schedule that could benefit the investors; instead they are fundraising in order to look for a product idea. This type of “science experiment” company may have very technical staff who could probably come up with a commercial proposition, but given the sums involved in ICOs, there isn’t much incentive after a fundraise to toil with the product-market fit.

As an investor, I might not want to participate in such ICOs, but as a technical person, I’m excited about these science experiments being funded by ICOs. In fact, that’s the greatest advantage of an ICO, funding things that ordinarily investors may not consider relevant. Bancor is a very innovative idea, but before the emergence of ICOs, Bancor would have been relegated to the academic world. What I am opposed to is the “blind them with science” approach some companies are using to market their ICOs. It’s for these cases we need a validation agent or rating agency.

None of this means that an ICO without a VC will fail. There’s currently enough momentum for many ICOs to succeed even without any kind of validation. But that will change. Consumer education will eventually happen, probably after the government mandates some kind of disclosure for consumer protection.

When that happens, VCs will have to work harder to stay relevant in the ICO market.

If they do, I imagine companies that go the ICO route could use it as a seed round – replacing the angel investor – and then be better positioned to raise venture capital later. This would put an ICO more in the realm of crowdfunding. A strong ICO would mean founders could negotiate from a position of strength in a venture capital round later.

A company that has already raised cash in an ICO could focus on finding a productive relationship with the right VC rather than being forced to partner with a VC who will provide the greatest amount of capital.

Also, in order to de-risk their investments, VCs often prefer not provide all of the capital in a round. This means bringing in other VCs who may not add as much business support, networking, and advisory. If the startup has cash from an ICO, a VC is less likely to need to bring in partners that don’t add much value.

We are at the very beginning of the history of blockchain design. We may see companies designing quantum computer resistant cryptography, others building massive transaction capability, and still other building upgradable blockchains. Their ICOs are a way for all of us to participate in that future. I believe VCs will be there as well.

Lucas Geiger, is a serial entrepreneur founder, and former VC at El Area Ventures. He is currently in stealth mode launching his next business involving blockchain technologies.