What is a ICO (Initial Coin Offering)
An ICO is the open offering for sale of a newly introduced digital coin. This may be a simple digital token which is only accepted within the issuing company’s website. Or it may be a proper coin, which is acceptable and later fully traded on various online exchanges.
Today there are too may IOCs out there, new ones appearing every day and there is a lot of confusion among investors. However many of these ICOs do have very good value and are expected to rise in price. Especially ICOs that offer to solve a problem. There are for example ICOs from companies that will be the next ebay, or the next Kickstarter, but they will fully operate in the crypto space alone. This means that you will be able to trade more freely, so as to buy and sell goods on those new crypto-bay websites. And also you will be able to launch crowd funding projects on the crypto crowd funding platforms. Each one of these companies is slightly unique. And if one company is unique enough, and has an original idea, then it will stand against competition. These good companies offer their tokens through their ICOs today, and some day they will probably go up in price a lot. The ICOs is offered so as to offer people these tokens at an early price, or at an extra discount. But because the entire industry is still in its infancy, you can still get them cheap even after the ICO deadline has expired.
In my opinion, ICOs are a good idea to invest in. But bear in mind that only good ICOs will eventually dominate in the marketplace. I strongly advise you to do research on each new company offering an ICO, before investing in it. There will be more and more ICOs, and some of them will still be good. Some of the tokens in those ICOs will indeed be offered at very low price, while others will be offered at near $1 apiece. Token value is not an indication of anything, a token or coin may be initially worth anything and still be a very good investment. My method to evaluating ICOs is based on the issuing company itself, and on what it has to offer. So a $10 token or coin, may actually be safer to buy than a $0.50 one. It all depends on what intrinsic value and original ideas they bring to the table. My question always is what problem are they targeting, and can they solve that problem in a unique way so that others cannot copy their idea? That’s how I evaluate ICOs and their new ideas.
What is the Blockchain
The blockchain technology is nothing more than an online ledger, in the form of code. What’s so unique about it is that it is immutable, and so it is impossible to commit fraud through data manipulation. The concept was originally introduced by Bitcoin, which was the first digital money to make full use of a blockchain model. Each cryptocurrency or digital token or blockchain service uses some kind of blockchain concept. Some use the technology of Bitcoin, some use the technology of Ethereum, and others use different types of blockchains.
In every case, the blockchain which makes this secure ledger work, it is very safe because the entire ledger is updated with every new transaction. And every user gets a copy of the entire updated ledger. That’s why criminals cannot commit fraud by creating fake tokens, or by spending tokens more than once.
Think about land registry, antiques and valuables today. And how criminals and lawyers operate today. They steal other people’s valuables simply by forging provenance documents and by claiming they are the real owners of those valuables. Blockchain technology will extend to these markets, real estate, fine art, etc. And some day even lawyers will no longer be able to commit this type of fraud. Because everyone will have a copy of an immutable ledger, showing the real history of ownership for each item. So if the fraudster in the future, attempts to modify their own cope of the blockchain ledger, the modifications will instantly be revealed at the first transaction. Because 1000s of other copies of the same ledger will all disagree with the copy of the fraudster.
Blockchain immutable ledgers will be used widely in the future, in many aspects of life. So as to eliminate transaction fraud of all kinds. And even though blockchain is associated with anonymity in most cases, in the case of valuables such as fine art, the objective is to maintain the original names of owners, in the ledger. In the case of cryptocurrencies, there is some level of anonymity, so it makes it easier for someone to avoid tax. But cryptocurrencies are not fully anonymous to the police. If the police and criminal investigators want to investigate money trails online, on cryptocurrency transactions they actually can do it. It’s only the tax office you can hide from, which in some countries people want to do, as tax rates are unfairly high.
What is a Cryptocurrency
A cryptocurrency is just a widely accepted digital token, based on blockchain immutable registry technology. Cryptocurrencies have some aspects similar to gold, in that they come in finite supply. They also are similar to paper money because they are divisible. Cryptocurrencies are expected not to fully replace paper money or gold, but to simply fill large gaps in today’s financial market.
First and foremost, cryptocurrencies offer the ability to send money from one country to another, without incurring high fees and long delays. That alone means massive savings in remittance fees for millions of poor, working people.
Cryptocurrencies can also help small import / export businesses manage forex risk and adverse forex conditions. So as to be able to import and export products at better prices. This is partially due to the high volatility of Cryptomarkets, but also because of the wide range of cryptocoins. For example, people in Venezuela who run small businesses are already heavily adapting Bitcoin. And they accept Bitcoin from their customers, and not domestic currency. This is because their domestic currency is going down in value whereas Bitcoin is steadily going up.
Cryptocurrencies are expected to dominate part of the financial industry, and the top 10 cryptocurrencies will even have futures and other derivatives listed in formal exchanges, alongside stocks and commodities. Some cryptocurrencies are being developed by legacy banks themselves, in their effort to catch up and not get totally left behind. The participation of banks in blockchain technology and cryptocurrencies further enhances trust and the value of the entire market.
The Blockchain is a Revolution Bigger than the Internet
The blockchain revolution is massive and is definitely real! There’s nothing wrong with it. Digital tokens cost money to make. So even though they are just series of numbers and symbols, they are valuable. Just like software can be expensive, and is just a series of symbols coded together. Old fashioned investors seem not to get this idea, and think that only physical objects are worth investing in, but they are completely wrong!
The entire blockchain technology is expected to bring affordable banking and money transfer services to more than one billion people. Today, these people don’t have access to the markets nor ways to even buy and sell items at ebay. And the blockchain revolution will even provide them with such platforms.
Legacy banking systems have failed to provide these people with real solutions, and as a result they have been unable to globalize their small businesses and to better invest their money. I do believe this is going to be big, because small amounts of money coming from billions of people, add up to much more money, than the fortunes of all the super rich combined!
Consider the case where someone wants to accept donations of just $0.10 from millions of people, each person sending in just $0.10 as a tip. The legacy banking system cannot provide that. Paypal and other money transfer services also have minimum amount requirements, and still high fees. Whereas some cryptocurrencies (not necessarily Bitcoin in this case), can facilitate fast and ultra cheap transactions, $0.10 at a time.
All in all, the blockchain technology will make markets more efficient. It will eliminate corruption and fraud, and it will enable even large businesses to limit foreign exchange market risk, by partially diversifying away from the US dollar. Bitcoin transactions can be $100million or more in value, at a time. So it’s not a virtual toy, but rather a real trading tool. It will make the internet evolve so much more, that billions more people will be able to do something useful with it. And not just use for reading the daily news. At this point nobody really knows how big this will be, but it will be really big and powerful.