Initial Coin Offerings – ICO
ICO’s are no more just a buzz word, as they attracted over 6 billion USD of investment in the year 2017, compared to 295 million USD generated from the year 2014 to 2016. This steady growth shows how serious investors are getting towards ICO’s and experts believe that this is just the start, ICO’s have a way bigger market in years to come.
What is Initial Coin Offerings (ICO’s)?
An ICO allows startups to generate money for their future roadmaps. Every ICO has two main components, business idea driving the project and cryptocurrency. The business idea of ICO can be anything. There is currently no bracket of what can be and cannot be an ICO. It’s generally an innovative idea that can give good monetary returns to investors. The second part is the cryptocurrency, every ICO has its own cryptocurrency in which overall trading of its ecosystem takes place.
To tell investors about necessary details of an ICO, every ICO has a document called whitepaper. A whitepaper has every detail related to the ICO like what business idea it has, the underlying technology, breakdown of its cryptocurrency, founding members details. You may call whitepaper an X-Ray of an ICO.
Let’s have a look at top two ICO’s of all time.
Filecoin is considered to be most successful ICO launched till date, as it generated capital of around 257 million USD. The idea behind Filecoin is to create a decentralized storage network across the internet by using IPFS (InterPlanetary File System) protocol. Filecoin is managed by a community of developers worldwide who cares about future of the internet. There is a lot of storage available online that is not used at all for instance in data centers, home PCs etc. Filecoin users will be able to use that storage by using Filecoin tokens, the incentive for people offering their storage facility is also Filecoin tokens. The idea is to make a decentralized storage facility not controlled by individuals.
Tezos is second most successful ICO after Filecoin, as it closed its ICO sale by generating 65703 Bitcoin and 36122 Ethereum.
According to the Tezos website, “Tezos is a new decentralized blockchain that governs itself by establishing a true digital commonwealth.”
First generation blockchain doesn’t have any on-chain mechanism to seamlessly amend the rules governing its protocol and explicitly fund protocol development, as a result, design choices are restricted only to core development teams and miners. Tezos amend this legacy monopoly by creating rules for stakeholders to approve protocol upgrades that are then automatically deployed on the network.
Tezos is next generation smart contract platform with Michelson as its own programming language. Whenever protocol changes need to be made, Tezos implements voting rights with its built-in consensus mechanism.
Majority of ICO’s tokens are launched at cheap prices. It’s good to invest in solid ICO’s as they will dominate future years. If you think ICO’s are useless and can never take off, remember today’s 15000 USD Bitcoin was 0.008 in 2009.
You can find a classic representation of four years history of ICO’s here.
by Sumiko Shibata