Are Initial Coin Offerings (ICOs) the new IPOs? Well they have one thing in common, they haven’t won a lot of confidence in general on being introduced into the market.
An ICO is like a fusion of an IPO and crowdfund, but investing in an ICO will give you crypto-tokens generated by the firm instead of stocks. You can either trade an ICO with others or use it to gain access to the technology that firm is producing. Any regulations regarding the ICO (and this is the part that makes governments uncomfortable) are made by the firm itself. That means the firm decides the token’s value, the use case of the token, and the time period of an ICO.
However, startups throughout the world are funding their firms and projects with the help of ICOs. Venture funds might be seeing red in the wake of the popularity of ICOs.
Governments like China have put in strong measures against ICOs. Still, according to ET Tech, startups globally have managed to raise funds to about $3 billion. Countries such as Singapore, UK, and Switzerland have seen many successful ICO launches such as Enjin, Bancor, and Block.one.
However, the fact that there is no regulatory figure that can curtail fraud in ICOs makes many people antsy about them. Several big players such as Google and Facebook have stopped advertising cryptocurrencies. However, startups seem unfazed by this move because it seems that Google and Facebook ads do not play a very big role in spreading word regarding their products.
According to ET Tech’s quote from Salim Ali, the founder of blockchain-based enterprise software solution provider Loyakk, “Google ads hardly play a role. Most of the marketing for ICOs is done through ICO media websites like Coin Telegraph. Only an amateur would Google for an ICO. The ad rates of the ICO media websites have also gone up due to the increase in demand for them.”
Venture capital firms would be doing a lot of thinking, now that ICOs are taking over their business. It won’t be surprising to see VCs trying to taste some of the ICO pie, considering investors can choose the time of their exit from the investment by simply converting the tokens to cash.
This article originally appeared on The Tech Panda