via LinkedIn
Initial coin offerings have come out of nowhere in 2017 to become the talk of Silicon Valley and Wall Street. Programmers raised over $2 billion in the first nine months of the year by selling their own virtual currencies to investors. That is nearly 1,000 percent more than the amount raised using coin offerings in 2016.
What is an initial coin offering?
Coin offerings are a way for start-ups or online projects to raise money without selling stock or going to venture capitalists — essentially a new form of crowdfunding.
The programmers raise money by creating and selling their own virtual currency, generally with rules similar to well-known virtual currencies like Bitcoin. The new tokens are usually designed so that they can be used only on a computing service the programmers are building.
Filecoin, which raised $257 million in the largest coin offering to date, is being designed to pay for storage on a global cloud storage network that the creators of Filecoin are promising to build. BET, another coin, is being designed to serve as the chips in an online casino its programmers are promising to build.
“Promising to build” is the operative phrase here, because in almost every case the services that will supposedly make these coins valuable have not yet been finished.
What does this have to do with existing virtual currencies?
These coins are generally inspired by older virtual currency systems like Bitcoin or Ethereum, with a cap on the number of coins that will exist — to provide a sense of goldlike scarcity — and a structure that allows them to operate entirely outside the existing financial and regulatory ecosystem.
Investors generally buy the new coins by sending the programmers Bitcoin or Ether (the virtual currency inside the Ethereum network). What’s more, many of the coins are stored, moved around and enabled by other Ethereum technology.
But the coins sold in coin offerings are meant to exist independent of Bitcoin and Ethereum, with their own free-floating value.
(For a more complete explanation of Bitcoin, click here, and for an Ethereum explainer, click here.)
Is there a relation to initial public offerings of shares in a company?
The name for coin offerings was clearly inspired by the initial public offerings that companies do to sell stock to investors. But unlike stock offerings, coin offerings are generally designed so that investors don’t get an ownership stake in the start-ups. If the coin does provide an ownership stake, the Securities and Exchange Commission has said, the companies must comply with all securities law. A few coins have done this, but most have tried to avoid it.
Investors can contribute as much or as little money as they want in these offerings, which are generally more like crowdfunding campaigns that new projects do on Kickstarter or Indiegogo.
Why would anyone pay for these coins?
Learn more: An Explanation of Initial Coin Offerings
The Latest on: Initial coin offerings
- Hottest Cryptocurrencies To Buy In Right Nowon August 3, 2022 at 3:23 am
The project people trust is usually an entire ecosystem consisting of different platforms, all intervened with a cryptocurrency. That cryptocurrency is what is worth investing in, because it is the ...
- Best ICO Cryptos to Invest in 2022 – Compare Initial Coin Offeringson July 28, 2022 at 5:49 am
However, if investors are looking to buy low and sell high, it is still beneficial to regularly search for an updated initial coin offering list to identify potential opportunities. Here are some ...
- MetaBlaze Founding Team Performs KYC With Certik: Brings Transparency to Web3 During MBLZ Initial Coin Offeringon July 28, 2022 at 5:19 am
DOVER, Del., July 28, 2022 (GLOBE NEWSWIRE) -- Due to the trustless nature of decentralized finance, it's easy for developers to "hide in the shadows." People who've been around in crypto have ...
- MetaBlaze Founding Team Performs KYC With Certik: Brings Transparency to Web3 During MBLZ Initial Coin Offeringon July 28, 2022 at 5:02 am
MetaBlaze's founding team has undergone KYC (Know-Your-Customer) protocol with the world's leading blockchain security company, Certik. MetaBlaze continues to show its commitment to transparency and ...
- Best ICO Cryptos to Watch in 2022 – Compare Initial Public Offeringson July 28, 2022 at 2:50 am
Nonetheless, in this guide, we explore the best IPOs to watch alongside some notable ICOs that are also due to hit the market this year. The 8 Best Upcoming IPOs to Watch in 2022 – Upcoming IPO List ...
- How to Buy a Coin Before it Launcheson July 28, 2022 at 1:34 am
After that, the project will then hold a presale launch, which is otherwise referred to as a presale initial coin offering (ICO). This should not be confused with the main ICO, which follows the ...
- A step-by-step framework for evaluating crypto projectson July 26, 2022 at 9:56 am
When it comes to cryptocurrencies, you need to consider a few key factors before you decide whether to invest. Whether you're just beginning to get on the ground floor of new crypto projects or ...
- Titanium Blockchain CEO Pleads Guilty to Fraudon July 25, 2022 at 8:50 pm
planted fake testimonials on a company website and made up business relationships to attract potential investors for his company’s initial coin offering. Between November 2017 and at least ...
- Titanium Blockchain CEO Pleads Guilty in $21M Securities Fraud Caseon July 25, 2022 at 2:11 pm
Michael Stollery, CEO of Titanium Blockchain Infrastructure Services, has pleaded guilty to carrying out a fraudulent initial coin offering that raised $21 million from U.S. and overseas investors ...
- Investing in crypto-assets: How to limit the risk of being exposed to fraudon July 25, 2022 at 1:56 pm
CrossTower partners with Ripple to add NFTs minted on XRP Ledger to its marketplace A 2018 report from a crypto-asset firm estimates that nearly 80 per cent of all initial coin offerings (ICOs ...
via Google News and Bing News