Since the first ICO took 4 years, and during this time dozens of projects have found millions in investments. Some companies differ with their scale, and investors around the world are showing off their incredible profits. Since 2017, Initial Coin Offering drew the attention of startups not connected with cryptocurrency and blockchain.
Really, this is not surprising. The popularity of ICO is primarily related to its simplicity, cheapness and profitability. Today, startups are difficult to get investments in the usual way, whether it's venture investment, crowdfunding or FFF, and investors find it more difficult to find future unicorns in the "pile of rubbish".
Initial Coin Offering is a way of raising funds for projects, according to which companies issue their own tokens and place them on a cryptocurrency market.
Many compare ICO to IPO, despite the fact that the goal is the same to get funds for further development and the results are achieved similarly, there remains a significant difference between these two concepts:
Big stable companies, with a good financial history are “pecking” on IPO;
The minimum cost of conducting an IPO is about $ 200,000, a maximum of several million dollars;
Becoming an IPO participant, investor invests money and with a share in the company gets the opportunity to participate in management issues;
Entering the IPO company must show the owner, provide reports, etc .;
Projects are usually in an early stage;
Thanks to Blockchain technology, the cost of ICO is 10 times lower than IPO;
So far the investor receives cryptographic tokens that are traded on cryptomarkets and that’s it. Nothing else. No matter how he would want more.
There is no legal regulation and supervision over the fulfillment of obligations.
With Crowdfunding, ICO has a lot in common. Both in the first and in the second case, the company collects funds for the implementation or further development of an innovative idea. Investors also invest in projects in order to get profits from them in the future (and as experience shows, this could even be the near future).
Date of the first ICO - June 2013, then the project, “MasterCoin” (later renamed to Omni) was able to collect more than 5 thousand bitcoins. Then came the project Nextcoin (NXT), which collected 21 bitcoins. Despite the fact that back then the process looked somewhat different (users had to send bitcoins to the address for massive output, on which all means were stored), the essence was still the same.
The end of 2013 - beginning of 2014 is considered the beginning of the boom of ICO-projects. Due to the great excitement and growth of scammers, many companies failed then, but this did not chill the entrepreneurial ardor.
Flash back to today. Only for the first 5 months of 2017, ICO has attracted $180 million (compared with 2016 - $101 million), this is the statistics of the research group Smith + Crown.
What’s the reason for such rapid growth? Some say that we’re on the way to a new economy, others are talking about another bubble. Both are right.
The largest ICO for today:
A few days ago, the public was stirred up by the news that the Israeli Bancor project had set a new record in the industry of crypto-currencies. With the help of ICO, the startup attracted $153 million. The Bancor team developed the Ethereum platform for the decentralized exchange of ERC20 tokens.
The second place, according to the success of the ICO, is the team of the project SONM.IO from Russia, in a little more than 2 days collected $42 million of investment through the ICO platform Ethereum.
In third place is Brave (a browser based on Blockchain), which in the end of May in just 24 seconds (!!) in exchange for Basic Attention Token (BAT) attracted $35 million.
The fourth place is occupied by the Aragon project (a business management platform with Blockchain). May 17th, in just 15 minutes, the startup managed to attract $25 millions.
On the fifth and sixth places, the Russian Blockchain-platform Ethereum, which in August 2014 attracted through the placement of broadcasts $18.4 million and American TokenCard, with $16.7 million, respectively.
We will not open America, if we say that investing involves a lot of risks. Investment in ICO-projects rightfully, can be called the most risky. Here, as everywhere, there are ups and downs, and the news of the incredibly successful Initial Coin Offering immediately overrides the news that another project has failed, and its investors have lost a lot of money. Scammers also adore the ICO.
So for instance, when the Aragon project was conducted by Initial Coin Offering, someone created a clone of the official account of the service on Twitter, and some users, not having noticed the trick, transferred more than $10 thousand to con artists. It happened that some wheeler-dealer announced the release of tokens only in order to misappropriate other people's funds.
Thus, it turns out that the main purpose of the ICO and its advantages at the same time are the most vulnerable places. The lack of legal regulation makes it possible to collect investments, without much effort, but absolutely does not protect investors.
Don’t hope that it will always be this way. Sooner or later, Initial Coin Offering will undergo certain changes and emerge from of the "gray zone" of the global legislative field.
Important to remember:
ICO is an extremely important tool for the business market, opening a number of opportunities for both entrepreneurs and investors;
If the ICO project is correctly selected, the investor has several times more opportunities to make a profit than in the traditional way of investment;
ICO is a dark forest full of all kinds of dangers;
Now is an ideal time for ICO. Although, maybe not.
It's definitely too early to make predictions about the future of Initial Coin Offering in the global economy. Perhaps ICO will help many people get rich. Perhaps, this is another bubble. It could be that, one day ICO will forever destroy venture investment in the form in which it exists today. Probably, it will open previously unknown resources for entrepreneurs. One thing is clear - the hero of the famous Soviet film "Wedding in Malinovka" Popandopulo was right: “We are on the verge of the grandiose upheaval!”