Difference between revisions of "ICO"
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:5. and the lack of business use-cases; | :5. and the lack of business use-cases; | ||
:6. And like any industry, the ICO arena has had its fair share of outright scams, pump and dumps, and blatant Ponzi schemes. | :6. And like any industry, the ICO arena has had its fair share of outright scams, pump and dumps, and blatant Ponzi schemes. | ||
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| + | ==Why ICOs are eels== | ||
| + | ICOs are the Wild West of financing — they sit in a grey zone where the U.S. Securities and Exchange Commission (SEC) and many other regulatory bodies are still investigating them. | ||
| + | :1. The main problem is, though, that most ICO’s don’t actually offer equity in start-up ventures; instead, they only offer discounts on cryptocurrencies before they hit the exchanges. Therefore, they don’t fit into the current definition of a security, and are technically outside of traditional legal frameworks. | ||
| + | :2. They are global instruments — not national ones — and they are funded using bitcoin, ether and other cryptocurrencies that are not controlled by any central authority or bank. Anyone can invest, and they can even do so pseudonymously. | ||
Revision as of 16:02, 8 May 2017
Contents
What is ICO
Initial Coin Offering - Also known as “token sales,” this new fundraising phenomenon is being fueled by a convergence of blockchain technology, new wealth, clever entrepreneurs, and crypto-investors who are backing blockchain-fueled ideas. ICOs present both benefits and disadvantages, as well as threats and opportunities, to the traditional venture capital business model. Why VC firms care
How an ICO works
A new cryptocurrency is created on a protocol such as Counterparty, Ethereum, or Openledger, and a value is arbitrarily determined by the startup team behind the ICO based on what they think the network is worth at its current stage. Then, via price dynamics determined by market supply and demand, the value is settled on by the network of participants, rather than by a central authority or government.
Why is an ICO interesting
- 1. One is profits — cryptocurrency investors made some massive returns in 2016
- 2. Liquidity of cryptocurrencies
Why an ICO scares off
- 1. regulatory uncertainty;
- 2. the high valuations;
- 3. over-capitalization;
- 4. the lack of control over financials, strategy, and operations;
- 5. and the lack of business use-cases;
- 6. And like any industry, the ICO arena has had its fair share of outright scams, pump and dumps, and blatant Ponzi schemes.
Why ICOs are eels
ICOs are the Wild West of financing — they sit in a grey zone where the U.S. Securities and Exchange Commission (SEC) and many other regulatory bodies are still investigating them.
- 1. The main problem is, though, that most ICO’s don’t actually offer equity in start-up ventures; instead, they only offer discounts on cryptocurrencies before they hit the exchanges. Therefore, they don’t fit into the current definition of a security, and are technically outside of traditional legal frameworks.
- 2. They are global instruments — not national ones — and they are funded using bitcoin, ether and other cryptocurrencies that are not controlled by any central authority or bank. Anyone can invest, and they can even do so pseudonymously.
