When it comes to funding a project larger than an innovator, Crowdfunding could be a well deserving option to consider. This has been a practice used long ago to finance project or venture by raising a very large amount of cash through a meager contribution of a larger population of people called potential investors, especially via the internet.
Crowdfunding has been explored through history to fund different kinds of projects ranging from book launch, war bond, and music to the building of a monumental base for the Statue of Liberty. Even the campaign that led to the election of Barack Obama as the president of the United State of America can be likened to Crowdfunding.
Generally, three types of actors facilitate the Crowdfunding process; the project initiator or the brain behind the idea, individual or group of supporters of the idea and a platform that bring all parties together to execute the idea. These people intimate the general population of their land breaking project or initiative and with the potential this innovation promised, investors are convinced beyond every reasonable doubt to invest.
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Several kinds of Crowdfunding exist nowadays, however, with the recent popularity gained by cryptocurrency and blockchain, a new kind of Crowdfunding known as Initial Coin Offering (ICO) has gained its way through many platforms to fund all kinds of the project around the world. This is when funds are raised for a project
ICO is an unregulated and fundraising method used by startup companies to avoid regulatory compliance and intermediaries in order to source capital using a digital value token as the reward to funders. It is sometimes called token sales.
ICO has become a sweet and fantastic way of raising fund to the extent that as at November 2017, there were around 50 offering a month with the highest grossing ICO as of January being Filecoin raising 257 million (and 200 million of that within the first hour of the token sales)
Likewise, investors on other hand have considered investing in ICO as a perfect option to explore due to the high return that comes with it. A Crowdfunding and syndication lawyer, Amy wan, once describe the coin in an ICO as “a symbol of ownership in an enterprise – a digital stock certificate”.
Nevertheless, every profitable investment comes with a risk that is equivalent to the profit. Lots of investors have suffered a loss of funds invested in ICO as scammers had also found their ways into ICO Crowdfunding to benefit from this national cake. They will flag off their campaign like every other genuine ICO and disappear after a few months when they have achieved their fraudulent aim. According to coinbase.com “most ICO don’t last more than 4 months”.
