This infographic provides a detailed look into Initial Coin Offerings. As this is a fairly new term in the world, not many people are aware of what it means, yet it can be explained in very simple terms. It could be described as putting the power of creating new projects or digital tokens into the hands of the people, rather than solely on the efforts of a company. It enables people to buy into and invest in companies that are offering a new digital token. It is conceptually similar to an IPO (Initial Public Offering), only it is dealing with new digital tokens.
A digital currency (or cryptocurrency) exhibits properties that are very similar to physical forms of currency, such as coins or banknotes, but they allow for transactions that can be instant, online, anonymous at times, and easy to transfer ownership. Depending on the cryptocurrency, some can be used to buy physical goods and services, and can be quite versatile, while on the other hand others can only be used to purchase a certain type of product or service. There are new digital currencies and company projects (with a digital coin being a small part of it), which are constantly being created, such as Ether from Ethereum, NES, Steem, Iconomi, Waves, Breakout Gaming, Neucoin, Augur, Maidsafecoin, Golem, and Digix DAO, to name a few. An Initial Coin Offering offers a new way to raise funds to support these kinds of projects and the creation of new digital currencies which potential users may want to support. ICO’s basically share the initial supply of coins to those that have supported the project from the start and/or offered money towards making the start-up happen. An ICO is clever because not only can the project get funded quickly and safely (though not always), but the former issue of initial coin distribution is solved simultaneously, as the initial supply of coins is distributed to those that have given financial support to the fledgling project(s).
If the project becomes successful, then those that have invested their money have the possibility of profiting from any rise in the digital token’s value. It can be a pretty successful investment if the company, project, or new token becomes popular. However, caution is to be had – as there are constant new IPO’s every year, and many fail. All investments have the ability to fail, so it’s a risk that one must take when putting money forward, and only after due diligent research has been done.
One of the first ICOs to come into play happened in 2014, with the Ethereum project. At the beginning of Ethereum’s ICO (or pre-sale), 1 Ether was worth between around $3.16 – $3.49 USD, today (March 28th, 2017), after a good rally this year, 1 Ether’s worth around $50.28 USD. Some of the other projects that have followed since Ethereum have included Xcloud Coin, Sembro, The Draftcoin Gaming Network, Bitrush Corp., Peerplays, Lisk, and many others.
Out of all these ICO’s, the most successful by far was Ethereum, which raised over $18 million dollars! It’s a prime (and rare) example of an extremely well done ICO for an extremely amazing organization. Many that invested their money towards this platform and it’s digital token (Ether) were able to profit greatly. Many of the other projects were still very lucrative, but nowhere near to the extent of Ethereum. And again… many have failed.
Although the first of these ICO start-ups was a little over two years ago now, it doesn’t mean that the rate of creation has slowed down. There are still many digital currencies being created that need investments in order to fully be created and go into circulation. Right now there’s an extensive list of digital tokens that are seeking funding, as they still have lots of raw potential, and a lot of people are very willing to get involved and invest some of their money into these projects.
A typical way in which many of these currencies gets created is when a technology team comes up with a brand new idea (which is often based on blockchain technology), that often requires a currency of some kind in order to make the idea function properly. People then buy these tokens in the hope that they’ll gain in value in the future with the success of the company or project.
Many different people people invest in various ICOs, from tech geeks, to large companies, and others in between. In some cases, like in that of Ethereum, some investors may also be able to profit from being able to build something on the platform that’s been created, such as build their own company or project.
The growth of new digital currencies has exploded over the last two years, largely due to ICO’s. In the future it seems that a lot more ICO’s will come into play, with a very exciting future lying ahead. When investing in an ICO, remember to first study the company or project diligently, as many many many new companies, projects, and tokens fail, compared to the few that become successful.
With that in mind, please enjoy the infographic below, and have a wonderful day!