What is an ICO (Initial Coin Offerings) and how doest it work

initial coin offering (ICO)

An initial coin offering (ICO) is the creation and sell of digital tokens on a blockchain– distributed public ledger. It is a tool for raising capital from the public to support a project, start-up or business. It is the equivalent of initial public offering (IPO), a private company selling shareholding to the public. But there is a difference between an ICO and an IPO.

´An ICO or Blockchain Token Offering is the initial offering of a digital cryptographically secure piece of data created on a blockchain as part of a decentralised software protocol.  (Adapted from Consensys definition).

ICO Funds Raised

´Initial Coin Offerings have raised $200 million dollars in 2017. Here is a short list of recent ICOs, and their fundraising results:

´Basic Attention Token — $35 million USD

´Storj — $30 million USD

´Waves — $16 million USD

´Qtum — $15.7 million USD

´Gnosis $12.5 million USD

´Iconomi — $10.5 million USD

´Golem — $8.6 million USD

Impact of Whales is to distort prices and market mechanics on new offerings
– Just the capital gains on a hypothetical $100 million holding in Bitcoin between 2016 and 2017 could easily
fund many of the ICOs in the system
– Short time frames for full funding (e.g. 30 minutes) suggest price insensitivity and large pools of available
capital looking to (1) lock in the value of capital gains in a less liquid investment, (2) speculate for higher
upside in a technology venture and (3) diversify portfolio exposure away from store of value
– Overfunding can be destructive to developers of emerging projects by undermining incentives and credibility

 

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