Crypto Currency and ICOs: Where is the World of Digital Money Headed?
Since the advent of the internet, everything else has slowly but surely begun to find their way online: stores, banks, schools, entire businesses and a lot more. In the year 2009, we witnessed the birth of Bitcoin, the world’s first digital currency developed by Satoshi Nakamoto. This has led to countless other digital currency ventures and will continue to do so for the near future.
Although, cryptocurrency is a tech innovative solution to how money functions, setting it up usually does require you to look at the more conventional and traditional aspects of raising funds, such as loans, venture capitalist funding or IPOs. Historically, this route has proven to be a rocky one, gobbling up crypto startups and spitting them back out.
To do an IPO for your crypto venture in the USA for instance, you will have to file statement of registration with the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA). You will also need to file such a statement with any and all other relevant regulatory bodies in all the states where you intend to offer the securities.
That is a lot of paperwork if you ask me, and all without any guarantee of your IPO’s success. Not to mention that this entire process with the SEC could stretch up to six months, during which time the company functions will be restricted as they constantly check to adhere to the SEC’s compliance policies. In all fairness, this rigorous and overwhelming process by the SEC is the only way to make sure that your venture is legit; that you are not just trying to steal money from unsuspecting individuals and investors with insufficient knowledge.
Also, investing in cryptocurrency IPO wasn’t easy for the average person; it required one to part with at least $1 million, according to Tai Zen of New York, a Crypto Investor and Analyst. An initial coin offering is priced such that it can be afforded by the average person. Anyone from experienced cryptocurrency investors to angel investors to individual cryptocurrency lovers and users can purchase a percentage of the opening market cap of the new currency in form of coin tokens. With cryptocurrencies ICOs, there is no need for brokers to help resell the shares to investors. Also, ICOs can last up to a month, creating time for interested parties to purchase some tokens no matter how busy they are, unlike IPOs that happen in a day.
There has been quite a number of notable digital currency successes with ICOs. Ethereum, a smart contracts platform offered an ICO, making its coin tokens – Ethers – available at about $0.40 per coin, which amounted to about $18 million worth of bitcoins. The value of these Ethers went up as high as $14 in 2016. NeuCoin, a recent altcoin sold out in just three days to a total value of $940,000, although this technically wasn’t its ICO. It had previously raised initial funding of $2.25 million through angel investors, including the SVP at Uber, head of growth at Facebook, co-founder of King games (Candy Crush) etc. Perhaps, one of the most successful ICOs is that of MaidSafeCoins (MAID). It set up an ICO to run for 30 days, but found itself out of coins tokens in just 5 hours.
ICO is an invention of the past few years that has really revolutionized the way we get involved in virtual currency opportunities. As the world continues to become more dependent on innovative tech solutions, we can only expect this trend to become a mainstay, significantly evolving and “changing the way we internet”, according to Asaf Zamir, founder and CTO of Cloud With Me.
One of the main attractions of ICOs is its ease and availability to potential investors. The fact that no middle men or syndicates and brokers are necessary is a selling point for this business funding method. However, scammers have leveraged on the ease, directness and lack of regulatory bodies to swindle people out of their hard-earned cash. It is becoming increasingly difficult to tell genuine cryptos from fake ones. Most investors now would not even touch a crypto venture if they do not have exhaustive proof of its authenticity or see other notable crypto investors or developers on the project. So how can this be malaise be curtailed? How do we filter out these scams to avoid discouraging investors?
There is the possibility of the SEC coming in to regulate the ICO market, according to this report. IF the SEC are brought in, this means that coin tokens will be traded as securities, more or less, ending the ICO market as we market. In this event, we should to see a longer time in evaluating and processing of an ICO, and some paperwork too. It may also change the landscape of investors as some present investors may back out due to the loss of the ICOs simplicity.
However, some investors who have previously stayed away, will see this as a positive move, because now they can be more certain that they are investing in authentic crypto ventures. Whatever the case, the world of crypto currencies and ICO investing are not going anywhere anytime soon and may continue to “operate in a legal gray area”, according to Outlier Ventures Research.