Since early 2017, The Initial Coin Offering or ICO marketplace has changed the landscape for cryptocurrency. This year, we’ve seen the crypto market in a bearish state. Despite, there are still lots of companies that are tapping in ICOs in order to raise funds for new projects.
If you’re going to ask new development teams why they resort to holding ICOs, you’ll pretty get the same answer: There is no way they can get funding for their project aside from ICO. People won’t just invest their hard earned money for nothing and they need to see value. They need to present a startup, tell people about it and convince them to invest. There are startup teams out there ho were able to raise tens of millions of dollars in successful campaign. That’s just impossible in traditional fund raising systems.
ICO has been a game changer for the world of investment, fund raising and startups in general. The process is pretty simple and there is more abundant capital. Through ICOs, developers are given the chance to get enough funding and continuously work for the improvement of their unique ideas.
However, there is one issue and 2018 is a lesson learned for ICO investors: There is no guaranteed profit holding ICO coins. ICOs also raised serious issues about transparency, investor protection and regulation. When people buy new tokens through ICOs, they expect to somehow benefit from the growth of the business. The token price must be able to reflect the project’s state of development, use case, community strength and other factors. But this year, we’ve proven that it’s not the case. No matter how good a project is, for as long as there are questions about transparency and regulation, there’s a huge chance that it will fail.
In a nutshell, the issue is that when ICO investors buy tokens, they think that they’re buying shares in a company but that’s not the case. No matter how successful the company is, the crypto market will still dictate the token’s value which is mostly driven by news, community sentiments and social media visibility.
The solution believed to solve all weakness of ICOS- security tokens. It is believed that Security Token Offerings will serve as the next giant step in the evolution of crowd funding technology.