This year marks a decade since Satoshi Nakamoto has laid out his manifesto detailing the possibility of the implementation of a virtual currency that can be used by anyone in the world at any given moment. Since its launch, bitcoin, and every type of cryptocurrency following it, has had a spectacular run in the market. Just last year, digital currencies have reached a combined market capitalization of over $115 billion, reaching an all-time high in the global charts.
Along with the rising trend in digital currencies, a new wave of crypto-fundraising is emerging: Initial Coin Offerings (ICO).
What exactly is an ICO?
The main idea of an ICO is that cryptocurrency ventures can create a digital coin or token which is then offered for sale to the public in an initial offering. ICO follows the process of an Initial Public Offering (IPO), the main difference only is that instead of getting an equity share in the company, the investor receives a new coin or a token as their investment. A common use case for an ICO is the value they provide to the investor which gives them access to using a specific project or server. The venture, in turn, uses this money to grow and expand their platform.
As a matter of fact, ICOs have proven to be a very successful venture. According to Forbes, in 2014, ICOs have raised about $25M and it has grown exponentially until this year. As of May 2017, ICOs have raised over $380M funding and it is expected to raise more this year.
These are just some of the intriguing data about ICO and as it emerges in the crypto-economic environment, it’s becoming more and more enticing to the crypto industry—without thoroughly scrutinizing its pros and cons. But before falling headfirst into this lucrative venture, there are the fine points of ICOs, especially the risks and the pitfalls of investing in one.
BlockchainSPACE organized a panel discussion with Cryptocurrency PH and Monico where they talk about ICO investment and the risks that come with investing in it. To learn more about the most common pitfalls in ICO investment, check out our article here.
Photo by Andre Francois from Unsplash.com