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Initial Coin Offering – High Investments
There is something about the ICO that compelled Patrick Byrne of Overstock.com to shut down his company and invest a total of $250 million in Initial Coin Offering (ICO) earlier this month. While. Patrick shuts down his project; Block.One discloses that it has reaped an alarming $700 million in real cash amounts by selling tokens called EOS in ICO. These two events trademark, by far, the biggest investment seen by organizations this year in ICO.
So what suddenly compelled organizations and entrepreneurs of today to divert their business attention span towards this emerging cryptic concept, the ICO. Here’s why we believe the future investment of cryptocurrency lies in this market.
The Complex Science Behind the ICOs and Future of Cryptocurrency
ICOs are basically an unregulated means by which market capital is raised for a venture. What really happens is that a white paper is created declaring the purpose and agenda of the project. It identifies the goals and objective and what amount of money is required to achieve them. It also specifies how long the ICO campaign is going to run for.
These ICOs then become the literal shares of the company which are sold and purchased by initially the investors. The coins sold in terms of cryptocurrency become the token of investment and ultimately benefit the purchaser after the specified investment targets are obtained within a specified time.
The fiat or virtual money gained by the investments is then further projected to expand the current coin value or initiate a new business plan.
A similar example of the ICO campaigns can be specified as the introduction of Ethereum into the market. Ethereum lays its siege in the cryptocurrency market as not only a form of currency, but a more stable blockchain technology which acts as a platform for its users.
Similar to Bitcoins, Ethereum itself is a decentralized but stable payment network. It deals with its own cryptocurrency termed as Ethers. All cryptocurrencies are free of any bank involvement or government regulations as transactions are highly dependent on blockchain ledgers. All these ledgers are decentralized and hence privatized from prying eyes.
How Does ICO work in the Cryptocurrency Market?
Bitcoin serves its purpose as a standalone digital currency. On the other hand, Ethereum serves as not only a cryptocurrency but a lot more services. One of the many services offered by Ethereum includes serving its purpose as digital contracts. These digital contracts are based on ICOs which acts as a form of token for selling and purchasing ethers using different cryptocurrencies.
Although ICOs are now gullibly internationalized and recognized among different virtual ecosystems, they are not anything like the virtual currencies you purchase on a specific platform that is biased to the platform only. These digital tokens are then transacted and used as virtual currencies to perform various businesses within the ecosystem. In case, a business turns successful or the market value of the currency increments, the investor has the sole benefit to cash out in the form of real money and make a profitable gain on it.
If by chance, you are under the impression that these cryptocurrencies imitate virtual currencies such as the ones in World of Warcraft, then you are wrong. Cryptocurrencies, unlike virtual currencies, hold value within the digital ecosystem and what becomes an attraction for most investors is the value of tokens (ICOs) rather than the currency itself. If the platform gains profitable results, the ICOs will provide a better ROI.
What Does the Future Hold?
The future of ICOs and cryptocurrency works hand in hand. With the advent of future blockchain technologies emerging to the forefront of the cryptic industry, developers project that the use of newer blockchains will ultimately result in creating more decentralized applications. This will allow company stakeholders to create more smart contracts and send them out into the market.
However, the ICO model is not completely scam-free as most entrepreneurs can fail to generate better investment returns and as a result, may drop the value of the launched coins. This will ultimately lead to losses, and since the market is unregulated, the shareholders may suffer a loss which cannot recourse itself back.
2018 brings great opportunities for individuals around the world. If people and organizations are making huge investments in ICOs, they are performing a thorough research. Are you planning to do the same? Don’t go all in! Research first. With that, I am signing off for the day. Cheers!
Related reading, see: (The 5 Most Important Altcoins Other Than Bitcoin)