[ad_1]
This article is provided for informational and training purposes only and is not intended as investment advice. Readers are encouraged to do their own research and consult with a professional before making any investment decision.
The Initial Coin Offering (ICO) has been a key part of startups encrypted since their rise in popularity in 2017 and was largely responsible for the subsequent cryptocurrency bubble. Startups or projects that create new currencies, services or apps launch an ICO to attract investors with a consolidated digital token (Ethereum, Bitcoin, etc.) And investors in return receive new tokens that they generally believe can provide a future return on their investment . This is roughly the equivalent of the initial public offering (IPO) of mainstream commerce as a way to increase investment capital, with the exception of ICO tokens issued by blockchain companies that allow access to the product or service of the startup, rather than representing any claim of ownership in the enterprise.
ICOs have often been the preferred means of encrypted startups looking for investments because they ignore the onerous process of meeting regulatory requirements and dealing with traditional venture capitalists. While the speed, ease of fundraising and release at will within the ICO structure have shown enormous potential compared to traditional methods of capital raising, absent checks and general regulatory budgets, this is not it necessarily translates into a traditional commercial appeal where security, responsibility and stability are sought.
Now that Bitcoin has dropped more than 80% one year after its meteoric rise of nearly $ 20,000 USD, the blockchain startup culture is entering a daunting but exciting phase where projects have to explode or collapse, in parallel with the collapse of the bubble of the years 90.
The evidence to suggest this result is accumulating. The Ethereum "Ether" native token has dropped more than 90% from its maximum up to $ 125, Bitcoin continues to wriggle against the US dollar, and the decreasing value of the cryptocurrencies held by startup blockchain is also seeing the most consolidated outfits in the industry that lay off staff in an attempt to deploy their capital more efficiently.
The future and perhaps the end of the ICOs was a significant theme at the Distributed 2018 San Francisco conference last year, as many aspiring investors saw the knife fall as if it were in slow motion, trying to find their perfect time to try to capture it. But why collapse?
There are many intersecting reasons and many points of view. One is the threat of punitive action by regulators in various national jurisdictions, another is that the bubble of excessive exuberance of the investor was the anomalous value, and not the collapse – with the fall that represents a return to the fairest value. The total investment of ICO in December 2018 has fallen to levels not seen since May 2017, ie when the boom took flight to precipitate the explosive rise of Bitcoin and Ether in the first place.
Key indicators suggest that a consumer-led sustainable recovery is not riding a white horse, Deus ex machinaand save industry in the immediate future. This is important because there will not be a generalized uptake of cryptocurrencies until traders start accepting them and when blockchain assets successfully stabilize selling their services and products to consumers, not just tokens.
At present, despite its ubiquity and its namecheck cachet, the blockchain has a minimal absorption or a current utility in consumer markets. Most startups that support it do not even need it. The sense of business and hard work are what will lead to the adoption – "build it and it will come" – but most of the involvement of consumers with ICO or blockchain companies has not been with the product of the startup, but rather with the financial instrument that is at the base of the economy instead.
If the currency was the first "killer app" for blockchain, ICO could be considered the first popular consumer product, although assisting startups to take off was secondary to the consumer's primary benefit of fast revenue and expenditure similar to casinos allowed them
The ICO phenomenon has attracted a large number of investments in the native cryptocurrency of Ethereum, since it was the prevailing de facto chip used for investments in ICO, and Bitcoin for its role as a precursor in the acquisition of Ether. This has accelerated the explosion of cryptocurrency markets in mid-2017.
If the culture of the Ico is in difficulty, then that of Ethereum will be in the near future; and this seems to be supported by the move of many blockchain startups to public and private placement offerings regulated for their capital raising efforts. An idea that takes hold of this business segment is to make equity (and sometimes confer other rights) of your business effective in accordance with regulatory guidelines as part of a "security token offering". (STO), instead of issuing cryptocurrencies for single-use use within the corporate economy.
The advantage of these tokens is that they could allow previous investors to exit strategies through sales of security-compliant cryptocurrency exchanges compared to generally multi-year investment partnerships required in traditional finance.
In a security token, companies would not just lead to their increased funding in Bitcoin, Ether or any other token native to other platforms such as long-standing ICOs, but could release their coins or tokens directly to investors in return of contributions of USD (or equivalent). This could mean a relatively small demand for Bitcoin, Ether and others that were previously required as investment precursors, although this does not mean that the STOs would not be hosted on the Ethereum network.
This transition to compliant STO is, perhaps, a natural result of the resistance of consumers to the late generation of ICOs, where historically about 80% has turned out to be scams, only 8% have ever affected an exchange and only 1.9% had a semblance of success – which, ignoring the scams, is a microcosm of the failure rates we see in the traditional business world being fair. This coincides with a history characterized by extreme price volatility and fundamentals shortages, a high attrition rate for weaker hands and dumping by ICO projects that collect investors' funds, exacerbating the collapse of sector-wide prices to leave their investors in hand.
It should come as no surprise that blockchain companies are increasingly concerned about the likelihood of punitive and oppressive punishment by governments in the countries from which they raised funds, and newcomers are looking for ways to abide by local laws.
While the private placement of the STOs can be more cumbersome than an ICO, a positive result is an increase in quality, since regulated supply models see companies (as opposed to "projects") responsible to investors in the provision of business models. sustainable, requiring roads to effectively sell blockchain products to consumers. At present, most private equity sales never achieve their funding goals, being limited to a more sophisticated pool of investors whose due diligence process typically requires more time to make investment decisions than a scan of a & # 39; time of a "white paper" of intentionally blank marketing of meaning and details. Investors of this kind will be disinterested in separating themselves with money for the sake of a token that differs only in the way in which its domestic economy functions as a financial product, which in itself has no intrinsic value.
It would seem that the innovative Initial Coin Offering will start to look a lot more like the traditional capital markets, before it becomes truly revolutionary.
Source link
