The Good And The Bad Of ICOs

Despite the DAO failure, ICOs grew into an established form of startup funding.
You are reading about: "The Good And The Bad Of ICOs"

By Hristina

Published May 30, 2018

First appeared on
Reposted with permission


What Are ICOs

Initial Coin Offerings (ICO) are fundraising mechanisms that operate based on the sale of crypto tokens in exchange for Bitcoin or some other high-value cryptocurrency. It is a mechanism used by startup companies to fund their projects. In some way, ICO is similar to IPO (Initial Public Offerings) where investors purchase the shares of a company. The main difference is in the lack of regulatory oversight of ICOs when compared to IPOs.

The Controversy

Compared to mining and Bitcoin exchanges, ICO is a newer concept, but it has attracted intense discussion and debate. Some view ICO as a fraudulent scheme because it is unregulated and allows startups to raise unjustifiable amounts of capital.

On the other hand, some view ICO as a welcome development in fundraising campaigns. In the US, for example, ICOs are not subject to restrictions imposed by the Security and Exchange Commission (SEC). As a result, investors are quite divided on whether to engage in ICO projects.

Regulatory Issues

As regards who can or cannot participate in an ICO, there are no restrictions, because ICO tokens are not securities. The funds are gotten from investors scattered over the globe, meaning the funds raised can be enormous. The way it works is that investors send funds in the form of Bitcoin or Ether to a smart contact who stores and distributes the funds in equal value to a new token at some time in the future.

The Biggest ICO Failure So Far

With ICO, the funds are raised before the product is available, making the investment highly risky and speculative. This is why it is subject to fraudulence, thefts, and failures. For example, consider the DAO ICO token.

DAO was the first attempt made to raise funds for a token on Ethereum. In 2016, DAO was poised to create an organization that was decentralized and would fund other projects based on the blockchain technology. Token holders would make governance decisions themselves without oversight or regulation.

DAO was indeed successful and raised over $150 million, but an unknown attacker capitalized on the technical vulnerabilities of the organization and drained up to $60 million from the organization. That’s about 40% of the funds raised.

ICOs Are Here To Stay

Despite the tragic outcome of the DAO ICO, other ICOs have recorded successes and led to the growth of startups. A typical example is that of Brave, the web browsing company.

Also Read: Infographic: How Blockchain Disrupts Businesses How To Sport Crypto Scams

The Day in Crypto


Data is beautiful

Brand development in forex and crypto: Most expensive domain names [Infographic]

Crypto infographics - Most expensive domain names in forex and crypto. Targeted brand development in forex and crypto with domain names.

Published October 12, 2018 by LK / forexnewsnow
Editor's note: Infographic | Crypto and forex brokers opt for a really crisp domain name.
Tagged as Infographics

Top 8 Women in Blockchain Technology [Infographic]

When it comes to women in crypto, the pre-2016 OG heads will probably come up with names like Alena Vranova and Blythe Masters. Alena Vranova is the former CEO of Satoshi Labs, the company that...

Published November 14, 2018 by Guest
Editor's note: Two OG crypto women that you don't hear much of anymore plus a crypto infographic about 8 women who work in blockchain tech.
Tagged as Infographics

Blockchain Consortium in Trade Finance: 6 Notable Networks [Infographic]

The success of trade finance blockchain implementations depends on how widely they are adopted. That's why we have seen businesses form consortia based on similar interests.

Published October 21, 2018 by Guest

Tagged as Infographics

Comparing Forex Market with Cryptocurrency Markets [Infographic]

One of the few metrics that cryptocurrency markets have in common with the forex markets in 2018 is the high percentage of total trades being located on few most popular markets.

Published June 10, 2018 by Guest
Editor's note: Still a long way to go for crypto markets.
Tagged as Infographics

Blockchain Technology 101: Blockchains, Blocks and the Role of Price [Infographic]

Blockchain technology 101: What is blockchain, what types of blockchains exist and what role does the cryptocurrency price play.

Published July 31, 2018 by Guest
Editor's note: What is blockchain, what types of blockchains exist and what role plays the price of cryptocurrencies.
Tagged as Infographics

Real-world companies that accept crypto payments [Infographic]

Infographic - Graphic map of businesses that let customers pay in bitcoin.

Published May 31, 2018 by Guest
Editor's note: Graphic map of businesses that let customers pay in bitcoin.
Tagged as Infographics

Infographic: Blockchain Hacks & Crypto Trading Platform heists 2018 vs 2017

Blockchain infographic comparing the biggest crypto heists of 2018 and 2017. In 2017 the focus lied more on ICOs, smart contracts and wallet.

Published July 10, 2018 by JMT
Editor's note: In 2017 the focus lied more on ICOs, smart contracts and wallet.
Tagged as Infographics

15 crypto kings that are making history with their engagement in the field of cryptocurrencies

Coining The Bucks With Cryptocurrencies Have you ever wondered how much masters of the cryptocurrencies are worth? Like the guy who founded Ethereum, or the one who started Ripple, for example. The answer, in short,...

Published May 30, 2018 by Guest
Editor's note: Infographic: 15 ultra-rich blockchain entrepreneurs and how they get into crypto
Tagged as Infographics

The Good And The Bad Of ICOs

Infographic: The good and bad of ICOs - Which token sales raised the most money in 2018?

Published May 30, 2018 by Hristina
Editor's note: Despite the DAO failure, ICOs grew into an established form of startup funding.
Tagged as Infographics

How Blockchain Disrupts Business [Infographic]

Published May 31, 2018 by Guest

Tagged as Infographics

How to spot cryptocurrency scams

Published May 30, 2018 by Guest
Editor's note: Infographic by the NOAHcoin team
Tagged as Infographics

All Infographics

Industry News Releases


comments powered by Disqus
About the Author
By Hristina

BIO: Hristina of, the blog that debunks conspiracy theories around the most popular cryptocurrency in the world. ·

Also by Hristina

Powered by Contentful