The Case for the ICO
The rise of the cryptocurrency movement provides a plethora of compelling narratives that are almost impossible to ignore.
Many are enthralled by Bitcoin’s unprecedented price increase from a digital currency with a relatively meaningless value to one that, at its high point, reached $20,000. As it’s joined by other cryptocurrencies that are also producing significant value returns, the art of watching crypto markets is at once a spectator sport and a participatory investment juggernaut.
Meanwhile, the underlying technology powering digital currencies, the blockchain, is turning heads as an enterprise-ready technology that’s poised to meet the computing demands of the future. It’s received high-level endorsements from the U.S. government, corporate CEOs, and innovative developers. Just this week, as Consensus 2018 kicks off, a cadre of Deloitte executives and team-members from Deloitte’s blockchain division, announced that they are leaving one of the most recognizable names in consulting and heading to an unknown blockchain startup to begin building the first operating system for supply chains.
Of course, one of the most exciting and most controversial aspects of the crypto boom is the methodology by which many new digital currencies or blockchain startups are funded. Initial Coin Offerings (ICOs) receive an eye-popping amount of investor attention. According to data compiled by CoinSchedule, ICOs brought in $3.8 billion for new blockchain initiatives in 2017, a record at the time. That pace has only accelerated this year. Although we are just a third of the way through 2018, ICOs have already doubled 2017’s total.
In short, ICOs are extremely popular, but everyone is not so enthused with this new method, and may have questions about the Digitex Futures ICO.
A Controversial New Methodology
ICOs function similarly to an Initial Public Offering (IPO) in that they provide critical funding to help new projects get off the ground. However, they differ in some crucial ways. For instance, Unlike with an IPO, investors in ICOs do not attain any portion of the company, they don’t have voting rights on future decisions, and there is no regulatory oversight into the viability of the products. To be sure, some have taken advantage of these features to enrich themselves at the expense of unwitting investors.
While the numbers differ to some degree, there is a disconcerting number of ICOs that launch with little more than a wish and a white paper. Some companies disappear after they receive the funds and others never come close to recognizing the potential that they promised at the onset.
To be sure, it can be a complicated scene.
Because many people see ICOs as the wild west of the financial industry, several central governments including China and South Korea have implemented an outright ban on ICOs. Meanwhile, in the U.S., SEC Chairman, Jay Clayton, asserts that ICOs should be regulated as securities, though he also expressed confidence in the legitimacy of many ICOs.
Despite hostility on many fronts, the ICO remains one of the most transformative fundraising mechanisms available to entrepreneurs and established companies alike. Last July, The Wall Street Journal declared ICOs the “new road to startup riches.” Their declaration is just one indication that ICOs are both viable and long-lasting, and helped inspire us in planning the Digitex Futures ICO.
In Defense of the ICO
#1 ICOs Provide Investors a Portion of a Platform
Some financial veterans like Warren Buffet are routinely bearish on the validity of cryptocurrencies as an investment vehicle. However, as Weiss Ratings, an independent crypto rating agency, recently identified, owning a digital currency effectively provides investors with a share in a blockchain platform. As blockchain technology increasingly becomes more prominent, and as a result, more valuable, these shares can be extremely lucrative.
Whether an ICO is for a blockchain-platform or a company that’s operating on one, these platforms can progress in value as the blockchain becomes more prolific and adoption accelerates. Therefore, ICOs represent an opportunity to get in on the ground floor of these projects.
#2 ICOs Even The Playing Field
The crypto ecosystem is still very much under construction. Platforms and currencies are continually trading dominant positions, and new norms are being developed as problems or limitations arise. ICO investors can directly shape the formation of the crypto ecosystem by investing in platforms that they believe can and should succeed. Essentially, ICO contributors are voting with their dollars to decide the tangible crypto landscape.
What’s more, although companies frequently place access benchmarks to private presales, the public offering typically allows anyone to invest in these startups. In some ways, ICOs are a democratizing mechanism where the most compelling and competent ideas can win out. We aim to level the playing field for retail futures trading, so the Digitex Futures ICO felt like a natural extention of that.
#3 ICOs Empower Investors
There are several tell-tale signs of an ICO scam, and capable investors can investigate these things before committing money to a project. Regardless of the financial sector, blind trust is a strategy doomed to fail. With ICOs such as the Digitex Futures ICO, investors don’t have to rely on brokers and intermediaries to make decisions for them. Instead, they can do their own research, pick the most compelling platforms, and support them with their investment.
A unique combination of investor prowess, crowdfunding ethos, and enthusiasm encapsulates the ICO movement. Throughout, investors are empowered to make their own decisions and to use their resources to forge an independent financial future.
The Decentralized Future
Most people would agree that ICOs can be improved, but investors are not powerless to pursue these changes. By conducting thorough research on projects, sourcing from trusted experts, and supporting viable projects, investors are incentivizing quality and sustainability over sensationalist nonsense.
Most importantly, just because ICOs have flaws doesn’t mean they should be relegated to financial purgatory. All indicators suggest that they will be an essential part of the economic future and they will help power the crypto movement as it continues to proliferate.