Initial Coin Offerings have become one of the biggest topics given the recent rise of cryptocurrencies and the widespread adoption of blockchain technology. Programmers raise money by selling their currency to investors who hope for an increase in value similar to buying a stock. This is essentially an alternative form of raising money without the need of VC’s or Wall Street for these startups. Additionally, they are not required to give ownership to their investors which is something many people are unaware of. Another common misconception of ICO’s that exists is that its value is in Bitcoin, although they are similar it is actually creating their own form of cryptocurrency. One coin offering called Filecoin that was created in order to develop cloud storage has already raised over $250 million in value even though this is all based on promises and potential. Some have become weary because of the volatility that exists in these new currencies and China even considers this to be illegal. While these offerings continue to increase in relevancy, regulators have been attempting to categorize these coins as securities similar to stocks and bonds but remain in a grey area of regulations. This is a topic that IT professionals who are looking for alternative forms of investment should be aware of. It is also useful for those attempting to make use of blockchain technology in order to improve their own financial technology capabilities.
1. Would you consider investing in an ICO if you had the financial capability?
2. What is your biggest concern regarding the future of cryptocurrencies?
I enjoyed reading your post. I also read an article about ICOs recently, stating that 105 coin offerings worth $1.32 billion were sold in the third quarter of 2017, so I think ICOs are definitely a big thing now. However, when it comes to whether I would invest in an ICO, I probably wouldn't. According to the same article, the success rate for new companies is extremely low. It seems a bit too risky to me.
ReplyDeletehttps://www.wsj.com/articles/whats-an-initial-coin-offering-icos-explained-in-11-questions-1506936601
Blockchain and cyrptos have huge potential in the future to disrupt many industries. We are seeing companies attempt to do this now: They describe their plan in a whitepaper and follow that with an ICO. Right now the is a lot of controversy and speculation over the subject as "companies" are fabricating bullshit whitepapers and then conducting an ICO in which they raise millions in minutes, and then they disappear with that money and any trace of where it went. In order for new ICOs to be successful, investors need to trust them. And my biggest concern is that these fraudulent ICOs are deteriorating the trust the community needs to operate on.
ReplyDeleteMoving forward, I think investors will do more research on the cryptos they are investing in before they purchase them. This is a necessary factor for this because the investors need to learn to invest in startups that will actually deliver a valuable product or service, instead of artificially inflating prices by pumping dollars into a balloon that is bound to pop. The .com crash is a great example of what happens when people pump money into startups that are all hype and don't deliver value.
https://www.bloomberg.com/news/articles/2017-09-28/u-s-s-top-financial-cop-warns-ico-market-probably-full-of-fraud