Why So Many ICOs — What Does It All Mean?

The world of cryptocurrencies has exploded like never before in 2017. The price of Bitcoin has catapulted to over $7000 for the first time in its history. There has also been an increase in the number of initial coin offerings (ICOs). According to CoinDesk, since Jan 2017, ICOs went from roughly $300 million raised in total since they began in 2014, to $2.7 billion raised as of October.

With the price of cryptocurrencies such as bitcoin, ethereum and others continuing to rise, the ICO frenzy is not expected to slow down anytime soon. There are just so many people hoping to become ICO investors.

Now let’s dig deeper into why there has been such interest in ICOs in general.

One of the major reasons for the explosion in ICOs is that it is an easier way for companies to raise money. Traditionally startups would have to rely on a bank loan, or venture capitalists to raise money for their product. With ICOs there aren’t as many hoops to jump through so it becomes easier for startups to raise much needed capital.

With it becoming easier to raise funds, it means that garnering support for exciting projects also becomes easier. The explosion of crowdfunding led to many entrepreneurs presenting their ideas to the masses and having them fund projects they believed in. An ICO is a crowdfunding mechanism, and investors are more inclined to get behind projects they believe in. Some notable projects include: Musiconimi, changing the music industry by providing value for everyone involved; Bancor, changing the financial industry by introducing continuous liquidity; and LiveEdu, changing the education industry by creating a next generation Lynda.com on the blockchain.

The interest in cryptocurrency has seen people just excited to be involved. People who invested in bitcoin in the early stages when prices were far lower, now have millions of dollars. Erik Finman invested in Bitcoin when it was $12 and owns 403 coins, meaning his net worth is around $2 million. Seeing young investors make so much money with bitcoin has created a frenzy in the marketplace. Many have a fear or missing out when it comes to new cryptocurrencies. Investors are trying to get a piece of every new token that comes on the market, hoping that they can get in on the next bitcoin early.

One thing putting a dampener on the ICO craze is the presence of scams. The unregulated nature of cryptocurrency is both good and bad. Good in the sense that it is not controlled by only one group of people. Bad in the sense that there isn’t an established vetting process for anyone wishing to launch an ICO. Consequently, quite a few investors have been scammed by phony products. Persons should research what they need to know before investing in an ICO to learn about all the things to watch out for.

Will it continue?

While we wish to think that there will continue to be as many ICOs as there have been in 2017, the truth of the matter is they will become regulated sooner or later. Countries such as China, have already moved to ban ICOs. Russia and Ukraine have issued warnings to the cryptocurrency and ICO markets that they will begin to regulate them. This has resulted in a loss of traction in the worldwide cryptocurrency market. As more countries either ban or put a hold on ICOs so that they can begin regulating them, the frequency of ICOs will significantly decline.

Even with regulation, cryptocurrencies remain very popular. The price of these coins continues to skyrocket and shows no immediate signs of slowing down. As more and more people begin to understand the capabilities of the blockchain and cryptocurrencies, then even when regulations do occur, ICOs will still be a popular crowdfunding mechanism. LiveEdu hopes to contribute to this widespread adoption of cryptocurrencies by offering live and video projects related to the cryptocurrency topic. If the token sale is successful, there will be hours of video and streaming content related to cryptocurrencies for viewers to learn more about the industry.

In conclusion, ICOs are here to stay. While there should be a decrease in their frequency once regulation happens, the blockchain offers too much for them to go away. Once the world begins to understand what it’s all about, ICOs, blockchain and cryptocurrencies will help create a wonderful future.

More by Dr. Michael J. Garbade

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