Developers turning to hard forks rather than ICOs for fundraising
Developers turning to hard forks rather than ICOs for fundraising’
Originally, companies who need to fund their development cryptocurrency projects did so by providing Initial Coin Offerings (ICOs). For those who need to do this fundraising, a new trend is emerging: the hard fork.
The forks imply a protocol change that results in an old and a new version of a cryptocurrency. The developers have no monetary advantage as they only make a change. The holders of the original cryptocurrency keep hold of coins on both branches.
This was especially true with Bitcoin Cash; this was a true Bitcoin fork that provided larger blocks. As the developers simply made a change to create larger blocks, they did not benefit financially from this project. It is, however, possible to create a fork where the developers do have a monetary advantage. In the case of Bitcoin Gold, premining was included. The developers begin the blockchain at a specific time and can then mine a certain number of blocks for themselves.
The biggest advantage to splitting an established cryptocurrency is that you inherit the existing user base. The only way this can backfire is if the users decide to dump their “free” coins, which can be a disaster for developers looking to make money through the fork. If this dump of coins occurred, the price of the mined coins would drop to zero.
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