Cryptocurrencies are the new craze in the world of finance. Anywhere you look, one financial enthusiast is trying to get a grip with the world of cryptocurrencies. They are digital currencies; they are not minted in a central bank or regulated by a sole administrator.
They, however, hold a whole lot of value and are used for transactions. Their secure and decentralized nature made them an almost indispensable asset for several industries.
This brings us to initial coin offerings (ICOs). They would not have been possible without the existence of cryptocurrencies. In the short time that they have been in existence, ICOs became the latest trend in business circles. Simply said, they are are the best way for a startup business to generate investments.
How Do ICOs Work?
Startups offer investors a chance to purchase their tokens at considerably low prices in exchange for valuable cryptocurrencies such as Bitcoin, Ripple, and Ethereum. Due to the low prices of tokens, successful ICOs usually end up raking in millions in investment for the startups. Depending on how successful the startup businesses turn out to be in the future, investors can sell tokens for huge profits.
When Did ICOs Come Into Existence?
This might be very surprising to you, but ICOs are very young. The first one ever took place in 2013 and was held by Mastercoin. The next big ICO was done by Ethereum, which raised over two million dollars worth of investments within the first twelve hours of the process. Today, this cryptocurrency is one of the world’s most valuable digital currency.
ICOs became the norms for startups soon after that. By the end of 2016, over a hundred million dollars were raised this way. Last year, that total figure grew to an unprecedented $1.25 billion.
There is no denying it, ICOs have been very vital to the economic and business development of the world as a whole. However, like with every new idea, there are many people very skeptical about this way of funding startups. To be honest, this is a very controversial topic.
Many financial analysts have raised the fact that it is highly unregulated as a major turnoff. Such concern is backed up by the fact that many ICOs were followed by some serious scandals. There have been huge scams and cases where investors have lost entire investments.
However, there are also several important advantages of this way of funding, which continue to attract an increasing number of worldwide investors. Some of the advantages include:
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Middlemen are cut out
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ICOs are available regardless of your location and nationality
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Offer cheap avenues of investments
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Allow you to contribute to the technological development of the globe.
