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Cryptocurrencies => Crypto Discussion => Topic started by: andreevavik22 on June 28, 2017, 08:49:01 AM

Title: ICOs: Why There's More Than One Way
Post by: andreevavik22 on June 28, 2017, 08:49:01 AM

Features  •  Investments  •  Initial Coin Offerings  •  Markets News
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Pascal Leblanc is a distributed ledger technology strategic advisor for financial services clients at global professional services firm EY.

In this opinion piece, Leblanc discusses alternative approaches to initial coin offerings (ICOs), putting forth a new model that could potentially mitigate the price volatility of tokens.

Initial coin offerings (ICOs) are dramatically increasing in popularity.

According to CoinDesk data, from January to the end of May, 2017, ICOs attracted $327m in capital, a figure that surpasses the amount raised in VC deals for the same period.

This makes sense. As a new alternative to crowdfunding, ICOs provide a way for project creators to acquire money for their operations in exchange for cryptocurrency tokens related to their project.

Investors from around the globe are starting to notice this new capital raising model, and we're also beginning to understand that it involves three major milestones:

Initial investments in the project in exchange for tokens
The listing of those tokens on an open market of exchanges
The sale of those tokens by project creators in the secondary market to maximize returns.
Yet, the fact that the market price is largely driven by the speculation on those secondary markets makes the value of the token highly volatile. This is precisely why most investors are choosing cryptocurrencies, as they are looking for a high-risk, high-reward investment.

However, on the other hand the volatility can be an issue for users of the token. According to TechCrunch, "the largest barriers to mainstream adoption is the price volatility of cryptocurrencies." That being said, investors and users don’t necessarily have their interests aligned.

This doesn't mean ICOs must be driven by speculation. I believe the current model to be a good one for certain projects, but I don't feel like this model is a one-size-fits-all. Some projects may require more stability, more control and more governance.

So, what do yuo think about?
Title: Re: ICOs: Why There's More Than One Way
Post by: alexnikon911 on June 28, 2017, 09:50:13 AM
By purchasing the tokens offered at ICO, investors primarily expect: to benefit from their sale at a higher price in the future (a classic example is Ethereum, whose tokens cost less than one cent during the ICO in the summer of 2014, and today their price has risen to almost $ 400); to use tokens for their intended purpose, having received the claimed services at a lower price.