New technologies are being developed and released every day, but very few have the momentum found in world of blockchain technology. The rise of this technology in recent years has led to a new method of raising capital called Initial Coin Offerings (known as ICOs).
ICOs are a means of crowdfunding in which companies will sell coins or tokens for their platform as a source of capital for their company. They are similar to Initial Public Offerings (IPOs), but with ICOS, investing doesn’t necessarily mean you get a stake in the company. Essentially, you invest a cryptocurrency such as Bitcoin or Ethereum into the company and will receive a certain number of tokens. These tokens will become units of currency once the project is launched and or once the funding goal is met. Tokens can then be sold to others, traded on exchanges or used within a given platform.
While this idea of the ICO is relatively new, it has absolutely skyrocketed in popularity. In 2017, there were over $5.5 billion in total funds raised in nearly 800 ICOs. Over $1 billion of that came within the month of December, which is a promising sign for ICOs going forward into 2018.
Only a few years ago, in 2015, it was rare for even a single ICO to have a million dollar sale. Now, there are numerous ICOs that have crossed that number and many have raised tens (or hundreds) of millions of dollars. In fact, the entire market for ICOs in 2015 was barely a few million dollars , which is a far cry from where it is today. In 2016, it grew to about $90 million, which is quite impressive but was no indication of the outstanding year ICOs would have in 2017.
So, what has led to the meteoric rise in the ICO market’s popularity? (#fomo)
Well, this is largely due to the massive increase in cryptocurrency’s value. With how popular cryptocurrencies have grown, many investors have shot up in economic status, gaining millions simply by holding these currencies over relatively short periods of time. There have been numerous successful ICOs that have provided a ridiculously high ROI, so this has piqued the interest of many newbie investors also hoping to ride the tide of success.
Though the rise of the ICO has been the fin-tech world’s most controversial and debated topic over the last year, it is still just in its infancy. Don’t be surprised to see the ICO market continue to grow as more and more people become interested and curious about blockchain technology development.
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