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Initial Coin Offerings Going Wild – A Brief Insight

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Bitcoin may be the most popular cryptocurrency today, but it is not the only one in the market. A host of other cryptocurrencies are emerging, and they are receiving significant financial backing through Initial Coin Offerings (ICO).

A Good Year

ICOs have been around since 2014. However, their popularity has spiked significantly in the past two years. 2017 was an exceptionally good year. Many ICOs have raised over $100 million while some went over the $200 million mark. In total, ICOs are estimated to have raised over $3.8 billion to date.

Here is a perspective of how the emerging cryptocurrencies have been performing in terms of money raised through ICOs.

NAME

YEAR LOCATION TOTAL RAISED
The DAO 2016 Virtual $168 million
Status 2017 Europe $109 million
Qash 2017 Asia $112 million
Polkadot 2017 Europe $121 million
Bancor 2017 Middle East $153 million
Paragon 2017 North America $183 million
EOS 2017 North America $200 million
Tezos 2017 Europe $236 million
Filecoin 2017 North America $257 million

It is important to note that the figures above reflect the value of Bitcoins used by investors at the time. Considering that Bitcoin’s value has been growing steadily in the recent past, the capital raised is higher today.

The Most Successful ICO So Far

Other than Bitcoin, Ether is one of the leading cryptocurrencies. Etherum was created in 2014, and each Ether at the time was worth $0.40. Etherum’s ICO raised $18 million in Bitcoins. Over a period of two years, the value of Ether rose from $0.40 to about $14 per token. Additionally, Etherum’s overall market capitalization was valued at over $1 billion.

Explaining Initial Coin Offerings

An Initial coin offering is somewhat similar to Initial Public Offering (IPO) except for a few legal and technical factors. Basically, interested investors buy a percentage of the cryptocurrency in the hope that its value will go up in the future. The cryptocurrency’s developers therefore raise the money they need to further their cryptocurrency’s development. Most ICOs accept only Bitcoin for payments, but some accept legal tender too. Additionally, the investors are guaranteed their money back if the target amount is not reached.

ICOs do not follow the legal procedures of IPOs, although the whole process is transparent. Nevertheless, the craze surrounding ICOs is attracting governments’ attentions, and concern is growing. For example, the Securities and Exchange Commission (SEC) is already cracking down on ICOs, and Canada is following suit. This, however, is not deterring the craze as 2018 is expected to see billions raised in ICOs all over the world.

Do you think that the ICO craze is sensible? Will emerging cryptocurrencies be profitable or not? Will you get involved in the craze next year? Share your thoughts in the comments below.

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