ICO is an initial coin offering which outlines one of the safest methods to raise money for new crypto-currencies. The initial coin offering is primarily a one or two weeks event where everyone is granted the opportunity to sell crypto tokens in exchange for, say, Bitcoin, ETH, XRP and much more. What follows is that the investors transfer stocks to a smart contract, which collects them and delivers something of an equal value. ICO is a way for startup firms to raise capital. Startups can build millions through crowdfunding focused around cryptocurrency.
What is ICO?
An initial coin offering (ICO) is a kind of funding utilizing cryptocurrencies. Oftenly the method is executed by crowdfunding but private ICO’s are becoming more popular. In an ICO, a measure of cryptocurrency is traded in the form of “tokens” (“coins”) to stockholders or investors, in exchange for legal tender or other cryptocurrencies such as Bitcoin or Ethereum. The tokens exchanged are raised as planned practical units of currency if or when the ICO’s funding purpose is reached and the project starts.
The first ICO was conducted by Mastercoin in the year 2013. In the year 2014, Ethereum raised $2.3 Million in the first 12 hours with a token sale. In 2016, 54 major ICOs raised almost $103 Million and this number is continuously increasing.
Market News and Trends
The legitimacy, price, volume and total market cap of cryptocurrencies depend on any country’s leading provider of banking systems. There are several factors such as approvals of various sections like SEC and what regulators think. Crypto market tends to react rapidly to any decisions regarding cryptocurrency regulation. Following image is displaying the impact of news and trends on ICOs.
In the month of June 2018, Google had stopped cryptocurrency related ads but now it has lifted this ban. There are countries like South Korea, China, and India which have banned ICOs. Investors in the United States have been witnessing the regulators sending mixed signals, even though the Securities Exchange Commission (SEC) has been fairly quiet on cryptocurrency regulation, they have been rejecting countless ETF applications citing reasons of “market manipulation” and volatility. There are scams and hacks such as DADI ICO customers were targeted by hackers.
Blockchain Platform Marketshare
ICO projects are classified based on the blockchain technology with which the project’s tokens were formed. The center is on the token blockchain and not on the blockchain technology on which the project platform itself runs. Following image is showing the Blockchain platform market share in ICOs as of April 2018.
Signs of A Good ICO
- The whitepaper is present and it’s accurate, good-structured and easy to learn.
- A good hype in crypto communities and the ICO is scalable.
- Index showing the available supply and active presence on social media platforms.
- The token price and a list of exchanges present.
- Experienced developers in the team, capable to strengthen the defined product.
- The product answers a true problem that exists or will exist in the future.
Signs of a Bad ICO
- Unachievable goals and a huge market cap.
- Unclear descriptions and unstructured whitepaper.
- An of any major exchange looking to list the ICO’s tokens.
- Undefined and inexperienced team.
- An absence of trust and transparency and improper team token handling.
The good ICOs are always open to public and people can help shape the future of crypto ecosystem. Initial Coin Offering (ICO) is one of the most successful and quickest means for blockchain-based projects to raise funds, and it may be an attractive possibility for possible investors to obtain a considered project and to invest in the subsequent cryptocurrency at initial token sale platforms, as these are normally accompanied by high-grade deals and rewards. The majority of ICO investors are enthusiasts and ICOs maybe not regulated.
ICO and Scams
According to a study, more than 80 percent of initial coin offerings (ICOs) in 2017 were scams. Report also said that in 2013, the market was comprised of 14 cryptoassets that were largely similar to Bitcoin. Now, there are more than 1,500 cryptoassets with over half being tokens created on top of other networks.
The total funding of tokens in 2017 was $11.9 billion out of which $1.3 billion of ICO funding went to scams. 1/10th of all ICO fundraising went to identified scams and the vast majority of the $1.2B was from just two projects, Pincoin ($660M) and Arisebank ($600M).
ICO Predictions for 2018
Clearly 2017 was the artistic year, nevertheless, the year was not without some severe imperfections in the crypto market. Tezos, the popular uncapped ICO which raised over $200M when Bitcoin was $2,500 is now almost dead with lawsuits and disputes between founders, stockholders of the company, and plaintiff lawyers representing troubled investors. So what will 2018 look like?
- In the year 2018, the blockchain will start to interoperate.
- There will be public+private blockchains.
- The crypto market will continue to grow because of trust and transparency earned due to regulations and experienced investors.
- There will be new platforms which will try to solve the scalability issue.