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Initial Coin Offerings, what you should know about them and how to protect yourself from ICO frauds


Oct 06, 2017 Posted /  1188 Views


Initial Coin Offerings, what you should know about them and how to protect yourself from ICO frauds

A look at Initial Coin Offering (ICO) might be worth giving while inquiring about the biggest trend in cryptocurrency. The concept of pre-sale coins in cryptocurrency or token of a blockchain project has been transformed into a new, different successful tool – useful to raise funds for a new application enhancement.

Let`s shed some light on Initial Coin Offering -

Outline - Initial Coin Offering

The C of ICO: the world calls it “an unregulated means of crowdfunding via.Cryptocurrency.

Bang On! But I believe it exceeded the limits with the implications it brings along.

Let`s get deeper into the matter:

With the advent of Initial Coin Offering, Individuals can offer, investors unit of a new cryptocurrency or crypto-token - altercation with cryptocurrencies, including Bitcoin or Ethereum.

Since 2013, ICOs were widely used for funding the expansion of new cryptocurrencies. The reason behind: If there would be a demand - the pre-created token can be easily sold and merchandised on all cryptocurrency exchanges.

The massive success of the Ethereum elevated the demand of ICO, usually everyone release token to fund the development of a crypto project. The introduction of ICO has revolutionized both the currency and financial system. ICO token could become the finest tool for security and shares as well.

How big a deal are ICOs?

Coinschedule perceived - over $2 billion in token sales in about 140 ICOs this year. A quieting argument has also been made declaring that ICOs are merely a flash in the pan - probably fade any minute as soon as a new fad comes into existence.

It seems like ICOs are everywhere. During a pre-sale period, buyers might email a seller and personally conduct a transaction. Further, a purchaser needs to use a website portal that incorporates an identity check.

Emma Channing explained it so well:

“I don`t believe that there`s been an obsession of Silicon Valley that has overtaken seed and angel - investing in a single year. Also, she argues: I don’t think Silicon Valley has ever seen anything quite like ICOs.”

Whereas, through ICOs – there is a probability of raising more than $4 billion this year. Alongside, she advised that ICOs are likely to succeed for companies that have “blockchain technology at their heart.” Otherwise, it will miss the mark when that’s missing or when the marketing and message are poor.

Her froth and attention towards ICOs are masking the fact - it’s actually a difficult method to raise money.

ICOs Biggest Proponents

Entitles as forward-thinking venture capitalists – “Fred Wilson” at Union Square Ventures and “Tim Draper” at Draper Fisher Jurvetson, among the most vocal believers in ICOs.

Other leading ICO investors include Chris Dixon at Andreessen Horowitz and entrepreneur and self-described “crypto capitalist” David Sacks.

Earlier this year, Draper participated for the first time in an ICO - trading the digital currency Tezos, a rival blockchain platform, in which a $232 million fundraising round included.

However, Wilson has not announced it to be a panacea.

Shedding light on the modern hype machine working on ICOs, they don't include a simple funding mechanism. In fact, they are an entirely different business model, Wilson mentioned in his writing. This shows that ICOs are signifying a new and exciting approach to shape as well as finance a tech company. Also, they are a legitimate disruptive threat to the venture capital business.

Associated Risks        

Simultaneously, there are some losers – if and when ICOs win.

A group name venture capitalists, Wilson knows: The majority of their investors’ power derives from their supposedly superior judgment - they fund projects that seem to be worthwhile. If else, the VC industry finds your startup non-reliable, you’re just left with limited options of bootstrapping or crowdfunding. For founders, there is another option of financial return that ICOs offer.

Brian Lio, the head of Smith & Crown, a cryptocurrency research firm also said that every VC firm is going to take a long hard look at the value they bring to the table and how they remain competitive. “What they contain, other than prestige? What offering is more advantageous than going to the community?”

At the same time, Lio started that buyers are possibly in peril and have to be cautious – competitively, the risk associated is higher than buying stocks, due to the complexity of the system. Also, it seems to be challenging to scrutinize an investment or the technology behind it. Experts are highly concerned about fraud in this largely unregulated space.

Fraud, Lies, and Despair: Their Solution

In expected, there are going to be people that find loopholes in the entire process and exploit them to favor themselves. ICOs are no different.

You can find buyers elaborating the fake stories of what they can build if enough people buy their tokens. But in reality, they’re not going to put the money to good use. Simply, they encash it and fade away or let them sit idle and appreciate in value forever.

Some solicitors specialized in preventing customers resolve disputes regarding every conceivable type of digital fraud. In their conclusion, they stated some effective approaches to avoid becoming a victim of a scam.

Initially, make sure to do your homework before you invest a penny: This includes research - Information about the company, its technology, its plans and the people behind the business. Also, it helps to ensure the legal structure of the deal. 


Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .

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Tags: ico ICO Guide initial coin offering ICO Frauds

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