ICOs offer funding opportunities for startups with innovative ideas that have the potential to fundamentally change our daily lives.

In brief: 

ICOs offer funding opportunities for startups with innovative ideas that have the potential to fundamentally change our daily lives.

Initial Coin Offerings (ICOs) has emerged as a hot thing in the blockchain community. ICOs have rapidly grown to account for more startup funding in blockchain-based companies than all of Venture Capital. They are an alternative to crowdfunding and have the potential to transform the way companies capitalize themselves. However, there are numerous problems with ICOs, like regulatory risks, concerns about fraudsters and scam artists, lack of transparency and accountability, etc.

In some ways, ICOs are similar to a crowdfunding campaign, but instead of offering a copy of a product, or shares of equity in a startup, here digital “tokens” are offered.  This process of selling new cryptocurrency tokens in an ICO results in funding received via cryptocurrency, most commonly in Bitcoin or Ether.

Startups around the world are raising hundreds of millions of dollars by issuing new digital coins. The majority of ICOs launched to date open up a brave new world of funding opportunities for relatively new and upstart companies with little or no existing growth or revenue.

This makes sense as there are plenteous ideas out there that have the potential to change the world, but no mainstream funding opportunities are available to turn them into reality. Isn’t it true that we would have no Tesla and SpaceX if Elon Musk not had significant personal wealth? It’s because, for the traditional venture capitalists, such ideas don’t seem viable. Thus, ICOs offer to fund crazy ideas which have equal chances of success as well as a failure but have the potential to fundamentally change our daily lives.

Instead of looking to traditional angel or venture investors, the startups have turned to the cryptocurrency community to crowdsource the purchase and usage of their token in an ICO. Here the risk is spread over a much larger pool of individuals, thus no single fund or entity needs to suffer alone. Thus, working together and funding new and challenging ideas, will eventually lead to human development. Ultimately, the brightest idea will win, and the barriers of geography, class, and creed will fade.

Since traditional venture capitalists do not fund such ideas, so in order to flourish these ambitious goals, we need to take a stand and try to self-regulate them to protect investors and startups. For this, there is a need to work with regulators and governments to build legal frameworks.

Disclaimer:  This is not an investment advice. It is of paramount importance that everyone should do his or her own due diligence before investing in any product, platform, tokens etc. Cryptocentral.io does not endorse any content or product published on this page. Our aim is to simply provide all the readers with the latest information in the field of cryptocurrency / blockchain industry that might be of interest to our readers.