Who was the first to offer tokensales? ICO history and its prospects in 2018
In 2017, the world faced ICO (Initial Coin Offering), a new way of fundraising when investors receive company’s digital assets (tokens).
According to Forbes, from January to December of the previous year, companies worldwide raised at least $5 billion using ICOs. Besides, the greatest crowdsales brought their owners from $100 million to $800 million of investments and provided token holders with several thousand percentages of profit. However, some investors also saw that ICO was a very risky investment way.
Officially, ICO appeared in 2013: it is the year when the Mastercoin project became the first to sell its tokens, receiving $5 million. But only four years later, Initial Coin Offering left the computer geek environment and started gaining popularity among private investors. One of the impulses to this process was an ICO launched by Vitalik Buterin's team: in 2014, he raised $18 million for further Ethereum development. First Ethers were sold for 30 cents. Currently, the exchange rate of this cryptocurrency is exceeding $1200.
In early 2016, the DAO platform also conducted a major crowdsale that appeared to be the largest one for its time ($150 million). DAO allowed the world to discover what is ico, but not just due to ambitious goals of its founders: in June 2016, hackers stole around $60 million owned by investors because of system vulnerability. It resulted in a huge public outcry and drew everyone’s attention to ico investment.
In 2017, the amount of successful crowdsales reached several thousands. One created various projects, from cryptocurrency exchanges to dating apps. Moreover, ico coin was sold by land-based companies as well, including farm businesses and even whole villages. Cryptocurrency and blockchain enthusiasts predicted the new business boom caused by ICOs and the death of such conventional models as IPO and venture investment.
However, a careful thought replaced the euphoria. It was clear that digital assets would be valuable only within the ecosystem. Therefore, assets applying tokens as significant part of the platform have the highest price now. One also realized that not all the projects would generate profit for investors. Some experts believe that only 5% of all crowdsales are able to successfully issue a product and receive income from it, as the Ethereum team has done.
It is suggested that the majority of countries will adopt the ICO regulation by 2018. It will reduce investment risks and allow the cryptocurrency crowdsale sector to keep developing.
ICO investments: advantages and risks
Today, with investment in bitcoin and other popular cryptocurrencies failing to bring high return, ICO investments can still significantly increase the cryptocurrency capital. Tokens that can cost less than a dollar during pre-sale and tokensale grow in price two or more times.
Nevertheless, risks of such investments are pretty high. In 2017, a well-known and promising tokensale conducted by the Tezos platform, raising around $232 million, ended with losses for investors: project organizers could not launch a platform and their disputes resulted in a range of legal proceedings.
Financial experts do not recommend purchasing tokens using borrowed funds and sums, the loss of which will worsen the investor’s welfare. By the way, one should thoroughly examine a company organized an ICO prior to investment, study up on its team and find articles dedicated to the project in specialized publications.
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