The ICOs, the shadows of cryptocurrencies
Behind every successful cryptocurrency there is an ICO that supported it, today each sale is a symbol of trust, tomorrow the face of nascent companies all over the world. This time we bring you an article about the evolution of this innovative financial tool, ending with its future projection.
What is ICO?
As its initials in English indicate, it is an Initial Coin Offering , meaning an Initial Offer of Coins, referring to cryptocurrencies. The idea is to make a first preliminary sale to launch the project, with two primary objectives:
Direct: To obtain the financing to be able to carry out the action plans, allowing to develop even new goals.
Indirect: Analyze the confidence that the market has, allowing to determine the acceptance of users to what is being sold.
Both objectives are related, since, if buyers do not trust, financing is almost impossible.
This idea of selling " shares " is not new, given that it existed before when companies placed in the stock market for investors to acquire. The main difference is that they are not selling shares or positions in a board of directors, the ICOs allow to acquire a vote in the decisions of the whole cryptocurrency, being each Token = 1 vote, there are no privileges in the decisions for the amount you have, guaranteeing the quality of being decentralized.
Another factor that is a double-edged sword was that, the ICOs were not regulated by any entity, facilitating the processes for the issuers and, allowed scams easily.
History of the Regulations
As mentioned, " they were not regulated ", given that the regulatory entities took until 2017 to realize the potential of this tool, both beneficial and dangerous.
Unfortunately, the response of various entities was negative, even restricting the realization of the same in the territory. Several economic and financial analysts considered this behavior as normal, given that the objective of the legislators, before innovating, is to guarantee the security of their citizens.
Fundamentally, they were related to ICOs as money laundering methods or financing to risk groups, such as terrorists or mafias.
With the passage of time, thanks to the pressure made by the community and successful projects in the countries, the regulations have been relaxed and adapted, with the goal of creating a favorable and safe environment for ICOs and consumers.
The common response is to create a regulatory entity that monitors these activities, reducing the degree of "anonymity" by looking for the possibility of tracking transactions. This has had benefits when hunting scammers or sellers of illicit goods, such as drugs or weapons. That topic is the subject of other posts that we have published.
Current perception
Currently there are around 44 active ICOs, 88 planned and 452 completed, according to the data of ICODrops, a platform that seeks to monitor the ICOs in the world. It should be noted that this only follows those that are considered non-risky or null, given that they want to protect their customers.
Although the situation simulates being pleasant for these sales, in reality there are still the doubts and uncertainty of this methodology, maintaining the discussion whether these activities should be completely banned.
The most optimistic, although they do not seem it, think that this method will be obsolete and will give birth to a new tool that manages to solve these problems.
ICOs were very popular last year, I think this year will be the last as more ICO popping out daily, majority of people will eventually lose interest in ico.