Initial coin offerings: cryptocurrency’s next high-risk big money maker

  • After the boom and bust and boom of bitcoin, where some lost millions on discarded drives and others found forgotten wallets with enough to buy a flats in Oslo, the next big thing in the cryptocurrency is here to generate millions of pounds for the lucky few brave enough to invest: the initial coin offering (ICO).
  • They’re essentially crowdfunding campaigns for cryptocurrency startups, these days almost always based on the Ethereum platform – a bitcoin spinoff which lets users build distributed businesses all plugged into the same blockchain.
  • Often the only chance of a return is if the value of the coins goes up, but with the examples of bitcoin (increase in value over the past 12 months: 410%) and Ethereum (increase in value: 4,000%) behind them, a lot of investors are prepared to speculate.
  • It’s since been outdone by at least 10 other ICOs run on Ethereum alone, including the Basic Attention Token used for tracking-free advertising on the Brave adblocking browser ($35m raised), the MobileGo token used in a cryptocurrency-based video game marketplace ($26m raised), and the Bancor Network Token, which backs a platform designed to make it easier for users to make and launch their own blockchain tokens ($152.3m raised).
  • Increasingly, these offerings are made before the company even really exists – perhaps a legitimate choice if the team can’t work until the coins have been issued, but one that leaves millions of dollars flowing into startups which would still be courting angel investors for five figure sums in a conventional market.

Risk-takers are cashing in millions with launches of new cryptocurrencies that make traditional initial public offerings look practically prehistoric
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