The Big News: ICOs
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The Big News: ICOs
You might have been seeing the term “ICO” in your Twitter feed recently. No, it’s not a typo. ICO (Initial Coin Offering) or Token Sales have been happening for a few years, but have recently been receiving a lot of attention thanks to a lot of $$$ flowing into the space.
So what’s an ICO or Token Sale? Smith and Crown defines it as: “an event in which a new cryptocurrency project sells part of its cryptocurrency tokens to early adopters and enthusiasts in exchange for money today.” Kind of like investing in a Kickstarter campaign but instead of a cool t-shirt, you get a token which is akin equity in the company or network. This token can then be used to interact with the app or network, or you can sell or trade it on any cryptocurrency exchange.
For me, one of the most exciting promises of this new phenomenon, is how tokens help solve the chicken and the egg problem of two sided networks. LinkedIn isn’t very valuable to me if I’m the only person on the network, but, if I’m awarded partial ownership of the network to be an early adopter, there is a stronger incentive to join and users will flock like VCs to early stage startups.
Last week we saw Brave, a web browser startup from the former Mozilla CEO, raise $35 Million, the largest ICO to date, and they did so in a matter of seconds. Their token (Basic Attention Token or BAT) incentivizes users and publishers to utilize this new network, and it also funds future development of the company. So far in 2017, over $200M has poured into a number of token sales, and with the much hyped Tezos ICO lined up for June, it doesn’t show signs of slowing down.
So, is all this just a bubble and a scam taking advantage of unregulated securities? Is this the future of VC and financial markets? Only time will tell, but in my opinion it's great that more people are getting exposed to this revolutionary way of funding and growing networks.
- Coinbase is looking to raise another round of funding which would make it the first unicorn ($1 billion valuation) in the blockchain space. They are looking to raise $100 million in this round, which would be the largest fundraising round yet for a blockchain based company. Link
- Coinbase user gets $8,000 stolen from his account as a hacker was able to take control of his email and Verizon wireless account. Link
- A Toronto cryptocurrency exchange is out $14 million due to a bug in an Ethereum smart contract. Unlike the DAO, they will not be getting their money back. Link
- ICOs are all the rage. Blockchain based browser, Brave, raises $35 million in 24 seconds via its Initial Coin Offering. Link
Chart of the Week
The total cryptocurrency and cryptoassets market reached an all time high of more than $100 billion this week. This is up from $20 billion in April. Woah.