A Complete Beginner’s Guide to Initial Coin Offerings (ICOs)
Seeking out original methods for a new company to raise money has birthed many experiments in recent years, but none of them has been more prominent than the invention of the so-called Initial Coin Offerings (ICOs).
ICOs may still be in their infancy stage, but they have already revolutionized how new projects go about raising funds. They have also been one of the most polarizing fields in recent years. While some praise ICOs for enabling new firms a quick start, others despise them because of their unregulated nature.
So, if any of you are still not quite familiar with what ICOs are, do not go about learning more by reading fake news or stories about failed projects. Instead, do yourself a favor and check the infographic below by BTXchange.
Think of ICOs as a form of crowdfunding within a digital environment. You like a project and wish to support it, so you invest digital funds in it (usually Bitcoin or Ethereum) and in return typically receive tokens that will have value once the ICO project becomes successful.
Unfortunately, in the spirit of the blockchain technology used to run them, ICOs have little to no regulatory oversight. As a consequence, their track record is riddled with thefts, frauds, and failures, which naturally give them a very bad reputation.
However, judging them based on failed projects does not acknowledge the number of startups that successfully got funded this way, and it creates a false image for the entire concept.
After all, a lot of traditionally funded projects have turned out to be frauds, so ICOs are not the only field with potential investment dangers. Yet, traditional investing or crowdfunding do not face nearly as much scrutiny as ICOs.
So, with hopes of somewhat clearing the ICO name that’s been too often run through the mud, the infographic below presents both the good and the bad sides of this revolutionary way of funding, and it will help you fully understand what they are and how they work.