Unregulated ICO's: Good or Bad?
In my previous post, I covered the basics ICO’s and how they compare to IPO’s.
ICO’s are an unregulated means of raising money for a new cryptocurrency adventure.
The keyword in the above statement is unregulated. So, is that a good thing or a bad thing? It depends on who you are and your worldview.
For instance, Governments believe it is their birthright to regulate ALL things. Their position is they need to regulate, to protect citizens from criminals. Ultimately, it is about control - the inability to control, to them, is bad.
I also stated that an ICO is a way for tech startups to circumvent a lot of the regulatory hurdles that companies face when they raise money through an IPO.
If you believe in the free market, this is very good. This means it’s the free market, the “wisdom of the crowd” that decides what should be funded and what should not, rather than a board of bureaucrats who think they are acting in everyone’s best interests.
However, there is no doubt that ICO’s can be risky. There have been a ridiculous number of ICO’s in recent times. Some issuers have been able to make a vast fortune from investors in a very short period of time with “pump and dump” schemes.
It is very much analogous to the late 1990’s and early 2000’s when frenzied investors would put money into anything that ended in “dot-com”. We saw in the fallout that a lot of these “dot-coms” had no sound business model at all and were wiped out. The good businesses survived the crash and subsequently thrived.
It’s very much up to investors to do their homework (i.e. due diligence) and read the ICO whitepapers thoroughly before they put up any money into them. But some are out there just to make a quick buck, and it’s they who’ll most likely lose.
I will be blogging more about ICO’s in the coming days.
If there are any inaccuracies in my post, please let me know in the comments below. I’m still learning.
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