Initial Coin Offerings – The Good, The Bad, The Ugly

    Last year, everybody suddenly took notice of cryptocurrency. With the value of Bitcoin hitting a peak of nearly $20,000 everybody became interested in purchasing cryptocurrencies.

    They have been generating quite a lot of buzz over the course of the past few years due to ICOs. Initial coin offerings are only five years old, but they have certainly garnered a floodgate of attention.

    In essence, they are a revolutionary way for startups to raise capital. During an ICO, a startup offers its cryptocurrency to investors in the form of tokens, in exchange for cryptocurrencies with a liquid value such as Ethereum or Bitcoin. These tokens can be sold in the future, provided the startup develops and becomes successful. It’s as simple as that.

    ICOs began in 2013 after Mastercoin came up with the revolutionary idea. Ethereum’s foundation was also built the same way. It raised over $2.3 million in startup capital in the first 12 hours of its initial coin offering.

    According to the infographic below created by, by 2016, 54 of the most significant ICOs that took place globally raised over $100 million. In 2017, the number reached $1.25 billion.

    There is no doubt that ICOs are highly controversial. With little to no regulatory bodies involved, there is the potential for things to go south pretty quickly.

    Why don’t we examine the two sides to ICOs so you can make an informed opinion about it?

    Advantages Of ICOs

    One of the significant merits of ICOs is the fact that they are accessible to virtually every person in the world. As long as you have the financial might, you can invest in one.

    In the same vein, this also means that ICOs allow startups to raise money through decentralized channels. It entails that a startup could run its ICO on an international level with ease. Generally speaking, it would not be obliged by any international authority and regulations that could be complicated and time-consuming.

    Another significant advantage of ICOs is that regular individuals can play a role in shaping the future of industries. By participating in an ICO, they are privileged to contribute to the landscape of an industry.

    The most significant advantage of ICOs, however, is the fact that they offer tokens at low prices. Since they attract millions of participants all around the world, it usually doesn’t take a lot of financial resources to take part in one. Some of these tokens can be acquired at meager prices and sold later for huge profits if the project is successful.

    Disadvantages Of ICOs

    ICOs can be a huge risk for investors. It is true that any type of investment bears some form of risk, but the risk associated with participating in an ICO is exceptionally high.

    The reason for this is that investors are putting their money into a project that has little to no groundwork. Although legitimate startups provide investors with a glimpse of their project, there is no guarantee that it will be successful.

    Another disadvantage is that ICOs are not overseen by any regulatory bodies. This means that there is no regulation in place to reimburse investors if things go wrong. Although most ICOs make use of smart contracts to lock things up, there is still a risk of frauds and failures.

    Finally, partaking in a promising ICO is not always easy. These days, such ICOs finish in minutes. This might mean that investors have to conduct transactions with increased fees to ensure that they are identified and registered by a network block.

    The infographic below includes more information about the good and the bad of initial coin offerings. It also contains other details such as their history, growth, and trends. So, if you want to make an informed decision about an ICO, then you would do well to check it out:


    Tell us what think if ICOs, drop us a line.


    • Tom La Vecchia

      Founder of New Theory & X Factor Media

      Founder and Publisher of New Theory Magazine and Podcast. Serial Entrepreneur who loves wine, cigars and anything that allows to people to connect and share experiences.

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