Initial coin offerings, or ICOs for short, are the latest craze in the cryptocurrency world so let’s try to make sense of the current situation surrounding ICOs and their interesting market
One of the most hotly debated (as well as most controversial) aspects of the current cryptocurrency sphere are so-called initial coin offerings, also known simply as ICOs. These forms of digital fundraising employ the use of cryptocurrencies in a way that allows project owners to raise bitcoins or ethers from thousands upon thousands of future users interested in the app being developed.
Unsurprisingly, ICOs have become a popular means of fundraising for startups in recent years. The lack of regulation allowed them to raise money quickly in return for so-called tokens, also described as digital certificates — at least that was the case until recently.
Nowadays, the ICO boom is beginning to stall a bit as a growing number of regulators worldwide turned their attention to ICOs and have decided to come into action. China, which is a country that once led the world in the number of active ICOs, recently decided to ban these fundraising altogether.
In the meantime, US SEC, Singapore, Hong Kong, and Russia followed China’s example to some extent, but — at least for now — they are still not ready to completely ban ICOs. They are, however, diligent in their efforts to heavily regulate them even if that means taking away some of the key elements that made this fundraising principle great in the first place.
This has obviously caused a lot of disruption among the ICO community. Consequently, the number of active projects keeps falling off and the general interest in ICOs keeps plummeting. This is, after all, rather logical — less and less people are encouraged to either invest in or launch an initial coin offering as regulations are stagnating some of the field’s most popular markets.
And this is where we find ourselves at this point — while many still see the benefits of ICOs, others think it may be time to pull the plug. So who’s right? Should we already be looking for a new alternative to venture capital?