If you are not an investor, your friends will tell you something about this thing. If you are not interested in economy updates — you`ll be followed by an internet advertisements. If not — you’ll definitely hear strangers discussing this on the street. Anyway there is a little chance that you`ve never heard about the thing called ICO. However, what stands behind this acronym and how can it attract interest you? The Coin Shark will tell you what’s what.
Belgian, Dutch and English businessmen traded stocks on the exchanges already in the 16th century. Today we have a complex stock market system and its total capitalization reaches as much as $65.6 trillion that is 18 times bigger than 2017 US budget total revenue. However, are stock market mechanisms really that reasonable for modern economy actors as the economy is shifting to the digital space deeper and deeper? Strict regulations of stock issue and trade, stock company establishment, stock exchanges operation — is this a vital playing field or just artificial barriers to make world economy even a more complicated thing? Anyway, if the internet digital space does not depend on borders and jurisdictions that much, why don’t we use the opportunities it provides and attract investments to make our idea come true? The possible answer to these and also many other questions appeared to be ICO (initial coin offering) — a sale of digital “shares” free of state regulations. Any company or an individual can issue these coins, usually based on blockchain-platforms, such as Ethereum.
ICO is a brand-new investment tool. It has a lot in common with initial public stock offering (IPO) because in both cases an issuer wants to collect investments by a public sale of project-related rights to implement the project. Usually it is a right to get dividends, that is ensured by a stock on an account or in the pocket (IPO) and by a token on a digital wallet (ICO). A token is an internal currency of the project. Investor can purchase it for fiat money (US dollars, euros, russian rubles, yuan, etc.) or for cryptocurrency. The token can be both a kind of “stock” and a form of “money”. Depending on a project, token holders can use them to pay for services and goods, to get dividends or trade tokens on cryptocurrency exchanges.
ICO-campaign usually includes several stages. The first one is a so-called pre-ICO when a limited number of tokens is sold at a reduced price. Then the main stages come. There can be several main stages held within days, weeks or even months one after another.
The first ICO ever was a cryptocurrency project Mastercoin that collected $5 million in 2013. Today there are thousands of ICO projects offering to invest in the creation of payment platforms, blockchain-banks, cloud services, transport systems, artworks monetization platforms and many other things.Unfortunately, though blockchain technology is rather reliable, ICOs happen to be scum quite often. This investment method is very attractive but indeed has its risks. While some gain millions out of ICO and implement promising projects, others accuse this investment tool of being too unreliable, risky and of having uncertain legal status. One thing is obvious — the world is observing the development of cryptocurrency market (that also includes ICO). Probably Mastercoin made as important step in 2013 as The Dutch East India Company made in the 16th century when it issued first tradable stocks on Amsterdam stock exchange. Will the ICO and cryptocurrency market be a basis of new, truly free economy, or will it take its place in history as the greatest “bubble” ever — the time will show. What’s left is to make a decision whether to risk or not.