Don’t even bother trying to understand what initial coin offerings are. Just don’t. The mechanism is so endlessly confusing that it will make your head spin far before you ever make a dime in profits.
In the past twenty-four hours, I’ve read articles and how-to guides on TechCrunch, The Next Web, Recode and more, all the while trying to figure out how exactly it is that these systems work. Most of the articles I came across were filled with technical jargon, impossible for any ordinary newbie to even decipher.
So, after several wasted hours drinking canned soda and cursing the ways of complicated bourgeois journalism, I finally took to social media and asked my fellow geeks to explain the thing to me.
What do you know, it worked!First, let’s get a good grip of what we are talking about here. Let’s say that there’s this startup that needs launching.
If this is your average startup, the situation is pretty clear: there’s a lot of bright ideas, but not enough money to pay for those initial expenses. When an entrepreneur finds himself in a situation like that, he or she is left with a couple of choices.
The first, and the most popular, is to seek out venture capitalist firms, companies that invest money in promising startups hoping to profit from their investment once the company shines.
But what happens when your startup isn’t secure or conventional enough for any of the big firms to put their money into it? You are left with no other choice but to sell stocks, launch crowdfunding campaigns and come up with other creative ways to fund your company.
But what if there was a different way? Something transparent and profitable enough for startup companies and individual investors to both put their trust into it?
This year, Silicon Valley seems to have found its answer. Using blockchain technology that offers both powerful security and healthy decentralization to investors across the world, tech companies are now releasing digital coins as a means to raise funds prior to launch.
These coins, you may also call them tokens or cryptocurrencies, are made available by the company at a discounted rate just prior to launch. The idea is that people will read into the company’s message and proposed goals, fall in love with their brilliant idea, and invest in their startup costs by purchasing digital coins that will later help them use the product when it does launch.
Now as the company flourishes, its tokens appreciate in value. They get costlier and costlier as more and more people want to invest in the company in order to use their services.
Just to be clear, unlike an ordinary stock or share, the tokens do not confer actual ownership of the company to the buyer, it merely acts as a means to use the tech firm’s products and services and trade with other cryptocurrency users for real cash.
Needless to say, this method of quick and easy fundraising is pretty new and inherently risky. Anyone who has had any experience with cryptocurrencies will tell you that they can rise and fall in value whenever, and yesterday’s billionaire could find themselves on the street today if they’re not careful enough as to how they invest.
And yet, despite the foreboding risk, token sales have amounted to as much as two billion dollars this year alone. If public opinion is any proof, people seem to like the idea of buying cryptocurrencies for projects they believe in.
And not only have ICOs freed the startup industry from the shackles of money-hungry third-parties, it has also welcomed mind-boggling innovations from companies which would have never made it to the market had this system not been there.
Climate Coin, a new startup that claims to use the power of blockchain to significantly reverse climate change, has just opened up shop. It’s supposedly working on a variety of techniques, including clean energy and carbon emission trading, to help reduce and reverse the effects of climate change and global warming.
We’ve also got UTRUST, which is a revolutionary new payment bank which lets you use a variety of cryptocurrencies to pay for your purchases online. UTRUST claims to adhere completely to the regulations set forth by the Swiss Financial Market Supervisory Authority (FINMA) and the ICO starts on November 2.
There’s also Trump Tokens, a new startup that encourages you to bet on the likelihood of President Donald Trump winning a second term and getting a chance to score some ether.There are a number of inherent risks to investing in something as new and unpredictable as an ICO.
Tokens change values all the time, not to mention that it’s said that over 90% of all publicly-released ICOs are scams. They are also very difficult to regulate and their effect on the economy is unforeseen. There’s good reason why countries like China and Ukraine have already put an all out ban on initial coin offerings.
However, if you believe that you’re smart enough, and daring enough, to get into the business of buying tokens, there’s an entire world out there for you to explore. Good luck!
Harold Stark covers the intersection of all things lifestyle and technology for Forbes Magazine and The Week. Follow him on Twitter!
Forbes has even more stories covering cryptocurrencies and the blockchain here: https://www.forbes.com/sites/haroldstark/2017/10/16/want-to-start-investing-money-on-icos-then-read-...
In the past twenty-four hours, I’ve read articles and how-to guides on TechCrunch, The Next Web, Recode and more, all the while trying to figure out how exactly it is that these systems work. Most of the articles I came across were filled with technical jargon, impossible for any ordinary newbie to even decipher.
So, after several wasted hours drinking canned soda and cursing the ways of complicated bourgeois journalism, I finally took to social media and asked my fellow geeks to explain the thing to me.
What do you know, it worked!First, let’s get a good grip of what we are talking about here. Let’s say that there’s this startup that needs launching.
If this is your average startup, the situation is pretty clear: there’s a lot of bright ideas, but not enough money to pay for those initial expenses. When an entrepreneur finds himself in a situation like that, he or she is left with a couple of choices.
The first, and the most popular, is to seek out venture capitalist firms, companies that invest money in promising startups hoping to profit from their investment once the company shines.
But what happens when your startup isn’t secure or conventional enough for any of the big firms to put their money into it? You are left with no other choice but to sell stocks, launch crowdfunding campaigns and come up with other creative ways to fund your company.
But what if there was a different way? Something transparent and profitable enough for startup companies and individual investors to both put their trust into it?
This year, Silicon Valley seems to have found its answer. Using blockchain technology that offers both powerful security and healthy decentralization to investors across the world, tech companies are now releasing digital coins as a means to raise funds prior to launch.
These coins, you may also call them tokens or cryptocurrencies, are made available by the company at a discounted rate just prior to launch. The idea is that people will read into the company’s message and proposed goals, fall in love with their brilliant idea, and invest in their startup costs by purchasing digital coins that will later help them use the product when it does launch.
Now as the company flourishes, its tokens appreciate in value. They get costlier and costlier as more and more people want to invest in the company in order to use their services.
Just to be clear, unlike an ordinary stock or share, the tokens do not confer actual ownership of the company to the buyer, it merely acts as a means to use the tech firm’s products and services and trade with other cryptocurrency users for real cash.
Needless to say, this method of quick and easy fundraising is pretty new and inherently risky. Anyone who has had any experience with cryptocurrencies will tell you that they can rise and fall in value whenever, and yesterday’s billionaire could find themselves on the street today if they’re not careful enough as to how they invest.
And yet, despite the foreboding risk, token sales have amounted to as much as two billion dollars this year alone. If public opinion is any proof, people seem to like the idea of buying cryptocurrencies for projects they believe in.
And not only have ICOs freed the startup industry from the shackles of money-hungry third-parties, it has also welcomed mind-boggling innovations from companies which would have never made it to the market had this system not been there.
Climate Coin, a new startup that claims to use the power of blockchain to significantly reverse climate change, has just opened up shop. It’s supposedly working on a variety of techniques, including clean energy and carbon emission trading, to help reduce and reverse the effects of climate change and global warming.
We’ve also got UTRUST, which is a revolutionary new payment bank which lets you use a variety of cryptocurrencies to pay for your purchases online. UTRUST claims to adhere completely to the regulations set forth by the Swiss Financial Market Supervisory Authority (FINMA) and the ICO starts on November 2.
There’s also Trump Tokens, a new startup that encourages you to bet on the likelihood of President Donald Trump winning a second term and getting a chance to score some ether.There are a number of inherent risks to investing in something as new and unpredictable as an ICO.
Tokens change values all the time, not to mention that it’s said that over 90% of all publicly-released ICOs are scams. They are also very difficult to regulate and their effect on the economy is unforeseen. There’s good reason why countries like China and Ukraine have already put an all out ban on initial coin offerings.
However, if you believe that you’re smart enough, and daring enough, to get into the business of buying tokens, there’s an entire world out there for you to explore. Good luck!
Harold Stark covers the intersection of all things lifestyle and technology for Forbes Magazine and The Week. Follow him on Twitter!
Forbes has even more stories covering cryptocurrencies and the blockchain here: https://www.forbes.com/sites/haroldstark/2017/10/16/want-to-start-investing-money-on-icos-then-read-...
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Francisco Gimeno - BC Analyst Good read. Forbes is always useful