ICO startups: who sells the largest amount of tokens and why
Attracting investments with the help of cryptocurrency is a new tendency in gathering money for startups. In the past, young projects were looking for sponsors via crowdfunding. Today they want to get cryptocurrency investments by issuing their own “virtual money”. Such an activity is particularly interesting for IT startups developing blockchain projects but sometimes companies not involved in high technologies also launch ICO. For example, “Kolionovo” farm owned by Mikhail Shlyapnikov received 401 bitcoins ($510 533) from 103 participants thanks to ICO.
ICO isn’t regulated by most countries (Russia is only planning to announce the law draft) which gives lots of freedom to companies and investors. The interest in investments is so huge that analysts talk about “speculative madness.” Forecasts regarding the future of ICO are very different: from market stabilization to chaos, massive decline and loss of money.
Thousands of dollars in a few minutes
In the age of ICO boom, the most successful projects manage to attract thousands of dollars in a few minutes. For instance, Bancor’s ICO issued on the Ethereum platform ended three hours after the start with the result of 400 000 ETH (around $153 mln). A product offered by the company is a decentralized platform for exchanging ERC20 tokens. It will allow users to change electronic tokens avoiding exchanges.
Another successful project which attracted lots of attention is Status. Its ICO was so popular that it caused failures in Ethereum and decline in the ether rate. Status is a Singapore-based startup, a blockchain-based app with a messenger and a browser. Its creators were planning to gather 300 000 ETH and would have achieved success if not for the system failure.
► The secret of popularity
ICO isn’t regulated which leads to misapplication. Some projects are created only to get investors’ money; the others can’t make it till the production stage because of development failures and team conflicts leading to loss of money by token holders. Nevertheless, successful projects bring huge profit covering losses from wrong investments. That’s why investors find ICO attractive.
Cryptocurrency owners from China actively invest in ICO. The legislation of this country makes it difficult for citizens to spend or invest bitcoin and ether in another way, so digital currency keepers are especially interested in ICO and investing in startups.
► The main advice – think critically
Experienced investors always recommend those who want to invest in ICO the following:
- Stay out of hype. Choose a project carefully, read about it.
- It is necessary to be good at the industry startup is working in (or consult knowledgeable people).
- Invest small amounts of money in several projects. Then you’ll have more chances to get a profit from investments instead of losing everything.
ICO is a promising alternative model of funding. It is destined for greatness in the world where cryptocurrency is a fully-fledged means of payment. However, now it is an ill-structured system, so ICO is quite dangerous for investors.