Crowdfunding and ICO (Initial Coin Offering) are high in Google search these past months. Since we have been seeing a lot of interest from traders on cryptocurrencies, particularly Bitcoin, we have decided to explain crowdfunding and ICO’s in the simplest way possible.
Crowdfunding as the name implies is funding large new projects by having small collective investors. Previously standard practice has been to ask large sums of money from few investors. Crowdfunding has revolutionized the manner in which finance for new projects is raised by asking small sums of money from many investors.
What is Initial Coin Offering? An ICO is crowd funding for the release of a new cryptocurrency. Anyone who finances a new cryptocurrency through an ICO is given a token of the currency. This later can be turned into cash.
The funds raised through an ICO are used for the technical development of the new cryptocurrency. The token is given prior to the issue of the currency on the financial market. The “investors” in ICO’s hope to buy at a premium and later sell at a much higher value when the digital currency is launched on the market.
Crowdfunding as a business model has become extremely successful. $5.1 billion was raised in 2013 through crowd funding and this was instrumental in helping projects and companies kick-off their ventures. The numbers keep doubling every year. They reached $34 billion in 2015. Today crowd funding has escalated to surpass even Venture Capital Funding.
ICO, as we have already explained, is the cryptocurrency version of crowd funding. It has been successfully used to finance crypto currencies such as the now famous Ethereum ETH. Cryptocurrencies are here to stay. ICO’s have become the easiest and most efficient method for developers to finance their projects. It is also a manner by which regular users can invest in these projects and see a capital growth.
When an Initial Coin Offering is launched, this usually extends over a period of one week or more. It is an invitation to the public, in general, to receive tokens of the new currency in exchange of established cryptos like Bitcoin (BTC) or Ether (ETH).
One of the most recent ICO’s has been for Antshares (ANS) – Antshares have been nominated as being “the people’s shares”. Their blockchain platform promises to make the Antshares accessible to the man in the street, which will be a welcome change to some of the more difficult access for some other currencies.
Whenever there is a new ICO the time frame, the price and a number of tokens is fixed and pre-determined. Therefore, the total amount of funds to be invested in an Initial Coin Offering is pre-set and limited to the target funding. The project funding usually is dedicated to the technical development of the currency. Moreover, during the ICO the price is set and the supply and price are both static for the time period of the offering.
Why Cryptocurrencies and Initial Coin Offerings are here to Stay
Cryptocurrencies have been called fads plenty of times. However, cryptocurrencies, with the most popular being Bitcoin are here to stay. In a recent study by the Cambridge Centre for Alternative Finance (CCAF) it is evident that millions of people all over the world are using cryptocurrencies very actively.
The same study reveals that there could be as many as 10 million wallets. The “accounts” where Bitcoin and other cryptocurrencies are held and stored. In real terms, it means that if an average user has two wallets, then there must be around 5 million users around the world, with China being the topmost user-friendly country in the world.
Crypto currencies and Bitcoin are not insignificant. Bitcoin alone has a market cap of $43 Billion. Although it’s price has recently been quite volatile, it is certainly not going to disappear! Notwithstanding the fact, the SEC recently turned down an application by the Winklevoss twins to trade Bitcoin in the open market as an ETF the reason given was only to be granted time to ensure better security in trading. It is not ruled out that the application will be considered favorably in future. The future is looking bright for Bitcoin and other digital currencies.
The ease by which money can be transferred peer-to-peer without the need for an archaic banking system and time delays have seen an eclipse in the use of crypto currencies. Furthermore, so far the anonymity has been very welcome. Japan has recently officially acknowledged Bitcoin as a legitimate form of legal tender. This endorsement has resulted in an increase in the value of $1 Billion in Bitcoin’s market cap value almost overnight!
Initial Coin Offering – Sheriff’s Conclusion
As the popularity of Initial Coin Offering and crypto currencies grows, so does the ease and possibility of trading Bitcoin becomes. The opportunities that are stemming for traders are also growing as the currency gains more and more strength. Recently we have reviewed My Bitcoin Bot. This is a trading opportunity for anyone who is interested in trading the volatility opportunities of Bitcoin. We are sure that as time passes we shall be seeing plenty of opportunities to take advantage of the cryptocurrency market.
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