Initial Coin Offerings: Is It a Bubble or the Future?

Initial coin offerings are a hot booming trend in the blockchain world. Consider it a financial catapult for newly born cryptocurrencies to come alive in the digital world. Simply put, ICO development is more or less like a fundraising platform where investors can buy some or many units of the latest cryptocurrencies in exchange for older, higher-rate cryptocurrencies like Bitcoin and Ethereum. 온라인카지노 

As risky as it may seem, people put their faith in the system by investing heavily. According to an article in the Economist magazine, “Almost $250 million has already been invested in ICOs, of which only $107 million has flowed in this year,” which is a huge number indeed. Moreover, with the success of the Ethereum ICO, this approach gained even more power. This hot space has opened up funding opportunities for startups around the world. 카지노사이트

Cumulative Blockchain Investments 2017 (Source – Coindesk)

But here comes the twist! Most recently, in the month of September, China banned ICO fundraising, seriously disrupting the economic and financial order. While the SEC in the US has issued a warning about the risks of token sales, China has already put regulations in place around it.

What is the madness about?

The question is, will the recently inflated initial coin offering market stick or will it burst like a bubble? Is it ready to replace the traditional approach to funding startups? Well, let's look at some facts and conclusions here.

The risky part

What makes the initial coin offering development approach "risky" is that the coins exchanged on markets serve a purpose for businesses that don't even exist yet. The process is more or less to look at whitepapers and judge which idea will work best and ultimately invest in it. Investors who are interested in the marketplace are addicted to the odds and bet on business ideas that capture their interest and confidence.

Another disadvantage of ICO investments is that they are not very tax efficient on the part of the issuers. Consider a scenario where a startup successfully raises money through a token sale. For the final income, they will have to pay tax according to the money received. Whereas in the venture capital funding approach, the process is cheap, uncomplicated and less risky.

In an interview with CNBC, Wikipedia founder Jimmy Wales said, “I think blockchain is a super interesting technology, but there's a lot of fads going on right now... There are a lot of these initial coin offerings that I think are absolute. scams and people should be very careful about the things that are happening in this area.” However, he added that “blockchain will be with us for some time to come”.

Since ICOs are unregulated, they do not provide protection to investors, resulting in fraud or loss. The recent Tezos ICO controversy is a clear example. The dispute highlighted the risks of the current initial coin offering (ICO) craze, which has raised more than $2 billion this year. Therefore, it is very important to properly evaluate an initial coin offering before investing in it.

How to evaluate the value of an ICO?

Follow the dimensions of the product. In the case of ICOs, many people try to follow the same investment approach as IPOs because they both seem like similar investment options. However, this is not the case. You should be able to judge your product idea based on the following categories:

No product – high risk because the idea has no face value. Example - Waves Platform. Although he raised 20 million USD, there is no such thing yet.

Entry Level Product – Can be considered as an investment option. Example - Iconomi. Although the technical code for the facial product does not exist, the company does not hide it. They have gained the trust of people through their existing product Cashila - A reliable product that has been in the market for several years.

Fully functional product- Super rare but promising product category. Example - Ethereum

Part of the benefits

However, launching an ICO is an attractive model because people invest huge amounts of money despite the risk factors.

Furthermore, compared to traditional investments and VC funding for startup ideas, the ICO launch approach remains ahead of the game. Unlike the traditional system, you do not waste time acquiring, nurturing and proving your own idea to start a business, but you save a lot of time because you get money at the initial stage.

With the token sale, the supporters of your startup idea also believe and thus eventually turn into early adopters and activists.

Final Verdict:

There is no doubt that ICOs have worked very well in the past, but in order to remain successful in the future, it is necessary to convince potential investors.

As long as people perceive digital cryptocurrency as an asset, the valuation of new coins will continue to increase. All the market needs to grow is more investors and even more impressive projects in the coming years. The ICO market has the potential to expand not immediately, but eventually. 안전한카지노사이트