An ICO (Initial Coin Offering) is the process of selling tokens
(coins or tokens) of a cryptocurrency before it is created. The process has
recently become a preferred means of financing blockchain-based projects: more
than $ 9 billion has been injected through this process into several hundred
projects since the beginning of 2017.The way things work is always the same: the project promoters
present their idea and ask the public, invited to buy tokens of the future
cryptocurrency on which the project will be based. This can be an independent
currency, but it is most often a token derived from an existing cryptocurrency
(Ethereum, Waves or other). Some of the funds raised are used to carry out the
project, while the ICO participants hope to make a profit, the token gaining
value if the project is successful.
The ICO (Claim Bitcoin
Zero) can be seen as an evolution of the principle of crowdfunding, the
power of blockchains and more, and has many advantages.
It's
simple and incredibly effective
Concretely, participating in an ICO boils down to sending
crypto-currencies (often ethers) from one wallet to another. It's nothing other
than that. And everything else is automated: blockchains and smart contracts
memorize transactions and, when the new cryptocurrency comes into being,
participants receive their tokens in proportion to their participation.
For the participant, no administrative paperwork or tedious
process: just a few clicks and minutes. And this is even more true for project
leaders: we saw ICOs conclude (and raise tens of millions of dollars) in a few
minutes, which would not have been possible with any traditional device. The
ICO is therefore the most effective fundraising device ever invented.
It's
direct and transparent
The process is done without any intermediary between citizens
and innovators. All the data of the ICO are known in advance, and everything is
written on public blockchains, searchable by all. We are far from the opacity
of conventional financing systems.
It's
validated by the crowd
With the ICO, the public judges. It is therefore a key first
step in the development of a start-up, which can validate its concept at lower
cost: if several thousand Internet users participate financially, it is a very
encouraging sign that the project attracts and will find His public.
Here too, I do not know of any such convincing method to really
"probe" the interest of the public around a concrete project.
It's
democratic
Anyone can participate in an ICO, and invest very small sums
(often starting from € 20) in new projects. Do we know many other methods to do
this?
It's
potentially profitable
If the currency develops, the investment can be very
profitable. We have seen the prices of some crypto-currencies launched by ICO
grow by 1000%. An ICO is a very high risk investment, but the risk can be
rewarded. While it is unhealthy to encourage speculation, it is perfectly
acceptable for individuals who have taken the risk of helping a young company
to be rewarded.
It's
win-win, for innovators and for the public
The ICO is a major break with venture capital, where only a
handful of individuals from a very limited number of banks and financial
institutions decide everything from giving themselves a large share of the
capital of start-ups - and being the only ones to benefit from their success.
Both citizens and innovators have everything to gain from
seeing ICOs grow. Individuals have privileged access to innovation through
projects they can support from the very beginning (rewarded if it works). And
the innovators can dispose quickly and without great constraint of the
financial means to develop their project in good conditions.
Of course, ICOs also have their disadvantages. Yes, there are
scams and fake projects launching ICOs. I myself was caught by phony projects
once or twice (about thirty ICO I participated). Yes, in terms of investment,
the ICO is risky. We have no guarantee and a significant number of the projects
financed will either go out of business or never see the light of day. So what
? The advantages of ICO far outweigh their disadvantages. In my 25-year career
in covering technological innovation, I have never seen an innovation financing
mechanism that is more efficient, more democratic and more equitable than the
ICO (Claim Bitcoin Zero). And the
principle of ICO perfectly illustrates the power of crypto-currencies, offering
radically new mechanisms, secure and without intermediaries, giving control of
their money to citizens and entrepreneurs.
Comments
Post a Comment