ICOs are the New Blockchain Trend Transforming Business

in blockchain •  last month

Initial Coin Offerings (ICOs) have quite literally dominated the business scene in 2017. Prior to this year, not many people outside of the core cryptocurrency and blockchain technology community had heard about ICOs but they have now become a popular topic of discussion across many diverse business segments. This increased level of interest being directed at ICOs is due in no small fact to the billions of dollars that have been raised by these campaigns. In previous years, ICOs barely registered a blip on the financial scene but in 2017, this year, the story has been completely different with record-breaking capital generation figures running into billions of dollars.
Document source


Definition

An ICO is a crowdfunding process in which a startup issues digital cryptocurrency tokens to investors in exchange for money in order to establish the startup enterprise. By investing in the ICO, an individual becomes an early adopter of the technology solution being developed by the startup. These tokens purchased during an ICO can be spent on specific items within the ecosystem of the startup or traded for Bitcoin and Ether when the startup comes online.
Document source

Unlike in the case of IPOs and other venture capital fundraising means, the entrepreneurs do not put up equity. This means that investing in an ICO does not give investors a share of the company and as such, they will not have ownership rights to future profits.
Document source


History

The first ever ICO was held in 2013 by Mastercoin which raised $500,000. It was essentially a P2P campaign and it used the Bitcoin blockchain framework. The next notable entry was Ethereum in 2014, which generated $18 Million in Bitcoin. This was the last notable ICO to be run using the Bitcoin blockchain protocol.

The emergence of Ethereum significantly accelerated the ICO process. The smart contract protocol of the Ethereum blockchain meant it was no longer necessary to create complex protocol layering on top of the Bitcoin blockchain. Developers could create custom smart contracts straight from Ethereum. This greatly simplified the ICO process and has led to the proliferation of numerous ICO campaigns.
Document source

In 2015, ICOs were still a relatively unknown concept and they raised a total of approximately $240 Million which was a small percentage of the over $34 Billion in crowdfunding for the year. It wasn’t until 2016 that ICOs began to capture the imagination with the DAO project raising $150 Million.

In 2017, ICOs have firmly established themselves as the principal crowdfunding means for blockchain-based startups. By the middle of 2017, over $1.27 Billion had been raised by ICOs. At the end of November, ICOs had raised $2.3 Billion and experts predict that it will cross the $3 Billion mark by the end of the year.
Document source


How ICOs Work

A startup wishing to conduct an ICO campaign typically writes a white paper that serves as the marketing document for the concept. This document explains the technical architecture of the technology, puts forward the token implementation plan, and gives a roadmap for the development of the technology. It also details the key value proposition(s) of the technology.

Working typically on the Ethereum platform, the startup creates a token which will be the cryptocurrency sold to investors during the ICO campaign. A website is created for the campaign which houses the white paper, promotional videos, important news as well as team member profiles.
Document source

Extensive marketing of the ICO is required to achieve optimal market penetration. Social media, digital platforms, cryptocurrency channels, and cryptocurrency news sites are just some of the marketing channels that are employed to publicize the token sale.

During the token sale, investors log on to ICO website and buy tokens using fiat currency, Bitcoin, or ETH depending on the preference of the startup company. After the ICO, the tokens are then listed on numerous cryptocurrency exchanges and the money raised is used to develop the project.
Document source


Impact of ICOs on the Business Scene

Perhaps the biggest impact of ICOs on the business scene is the way in which startups are funded. There has been a remarkable shift from IPOs and other more traditional venture capital models to the ICO model. This has remarkable implications in terms of liquidity and growth capital. There is also an apparent shifting of focus from equity holders to token holders.
Document source

Due to the meteoric rise of Bitcoin and ETH, many people are actively seeking to become early adopters of the next big thing in the cryptocurrency world. This plays right into the hype surrounding ICOs and helps to feed the investor frenzy. Startups literally bolt a cryptocurrency token to their business model and sell it to investors.

On the flip side, ICOs have also made it a lot easier for a number of entrepreneurs to secure funding for their projects. The stringent regulatory and statutory measures required for venture capital fundraising has made it difficult for many promising projects to see the light of day. With ICOs, entrepreneurs can go straight to everyday people and convince them to put up money in their ideas and concepts.
Document source


Regulations

One of the drawbacks that have been identified in the ICO model has been the lack of adequate regulation. With the figures being posted by ICOs, it became necessary to introduce some level of regulatory framework into the system.

One of the thorny issues in the space has been the assertion by some financial experts that some of the tokens being sold as utility tokens are actually securities which would mean that they come under the purview of securities law. The SEC agreed with this and issued a ruling on the matter. Since then, there has been a much stricter observance being paid to ICO campaigns. In countries like Japan and Singapore, the Government has taken steps to introduce a regulatory framework that protects investors from fraudulent ICO campaigns.
Document source


Final Words

There is no denying in the fact that ICOs have greatly affected the business process. Billions of dollars have been raised and many innovative technological solutions are being developed. There are, however, numerous pump and dump schemes run by startups with mediocre economic value. With the help of adequate regulatory framework, the ICO landscape can be sanitized ensuring that investors are protected from unscrupulous individuals.
Document source



Note: This document with all the information in it is shared here to boost our knowledge of cryptocurrency , the original document can be found Here



THANK YOU FOR VISITING MY BLOG TODAY!!



I AM STILL YOUR BOY @MBJ

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Sort Order:  

Between ICOs and large corporations developing their own chains (i.e. IBM, Amazon and Oracle - all unfortunately centralized) we are living in exciting times. I doubt the landscape will be recognizable a year from now. BTW, have you written anything about the US SEC declaring Bitcoin a commodity?

·
·
·

Thanks.

Some sources at the Chicago Board and Options Exchange (CBOE) remain sure that the VanEck Solid X Bitcoin ETF will be approved at the beginning of 2019. Most of the experts believe that the Bitcoin ETF will receive SEC approval in the future.
https://bitcoinexchangeguide.com/cboe-vaneck-solidx-bitcoin-etf-insider-99-perfectly-approvable-to-the-sec/

Comments due toward the end of this month:
https://www.sec.gov/rules/sro/cboe.htm

Do you forecast anything other than COBE picking up the BItcoin price and/or is there a September deadline for the SEC? Or are these simply delay tactics?

However, if the bitcoin ETF plan proposed by COBE in September has not passed the audit, then after the volatility trend, it may be a big wave of plunge. I suggest that you should prepare for the long-term battle.
Am I missing that COBE is key right now or are there other important ETF proposals?

Any opinions on the New York Cryptocurrency Exchange Act impacting Wall Street? Or is this not very relevant to COBE.

I don't mean to burden you with inquiry, I just want to be part of the goingsons when I have some free time. My hope is to do this full time one day.

really its a amazing article regarding crypto.
it clears my concept.
thanks for it.

Hi @mbj!

Your post was upvoted by @steem-ua, new Steem dApp, using UserAuthority for algorithmic post curation!
Your UA account score is currently 2.033 which ranks you at #23805 across all Steem accounts.
Your rank has dropped 2 places in the last three days (old rank 23803).

In our last Algorithmic Curation Round, consisting of 324 contributions, your post is ranked at #308.

Evaluation of your UA score:
  • Only a few people are following you, try to convince more people with good work.
  • You have already convinced some users to vote for your post, keep trying!
  • Try to work on user engagement: the more people that interact with you via the comments, the higher your UA score!

Feel free to join our @steem-ua Discord server