🚩ICOs Explained: 5 Examples of Successful Coin Offerings
Cryptocurrencies are inescapable right now. From social media to business publications, to that hipster at your local coffee shop, everyone is talking about different digital currencies.
Because of the fervor surrounding such technologies, hordes of people are itching to get in on the ground floor of the next mega coin. As a result, various initial coin offerings (ICO) have exploded, generating millions in immaterial money.
ICOs have become a force of nature within blockchain communities as they hold the possibility for organizations to revolutionize the way they generate capital for their project.
The various blockchain-based brands that have popped up in the past 1–2 years have raised mind-boggling amounts of money through the implementation of ICOs. Curiously enough, however, these events don’t provide investors with shares of the business, as a more traditional IPO would, but instead provide the upcoming company with cryptocurrency in exchange for the hopes of striking it rich.
This may seem a bit strange or confusing. To better understand what an ICO is and how it works, let’s explore the topic more in-depth.
What is An Initial Coin Offering?
An initial coin offering is a means through which a cryptocurrency-based corporation can raise funds. During an ICO, the company exchanges future crypto-tokens (of the brand’s own creation) for traditional or digital currencies that currently possess value (Bitcoin, Ether, etc.).
Popular finance publication, The Economist, described the structure of ICOs as follows:
“ICO ‘coins’ are essentially digital coupons, tokens issued on an indelible distributed ledger, or blockchain, of the kind that underpins bitcoin, a crypto-currency. That means they can easily be traded, although unlike shares they do not confer ownership rights. […] Investors hope that successful projects will cause tokens’ value to rise.”
To establish and run an ICO, a business would typically need to produce a white paper to breakdown exactly how the organization’s project would work, establish a website for the brand’s online existence, and explain how their offering would serve the market or be otherwise beneficial.
Then, the blockchain-based business would need to promote the ICO through various means to gain buy-in from the public. Those who invest in the business are then sent the brand’s proprietary token to utilize or hold upon launch.
The hope of investors is that the digital token will generate prominent usage and circulation, thereby increasing its value.
With a solid understanding of what an ICO is and how it works, let’s explore some of the most lucrative (and sometimes jaw-dropping) ICO results from the past couple of years.
Successful ICOs
#5: Storj
Storj is a relatively new (and the first) blockchain-based cloud storage company that enables its users to rent out excess storage space, thereby creating a new marketplace. Because of the platform’s technological foundation, Storj aims to be cheaper, faster, and more secure than any other competitor in its space.
One of the reasons for Storj’s massive success with its ICO is the company’s simplistic nature. Some blockchain startups can be challenging for folks to understand, ultimately deterring them from investing.
Because it’s simple to understand Storj’s business model, the company’s ICO generated an impressive $30 million in less than a week.
#4: The DAO
The DAO (Decentralized Autonomous Organization) used to hold the record for the fifth largest ICO to ever be held; unfortunately, in addition to the record getting smashed by another company, The DAO has since been tarnished with embroilment.
The DAO’s mission was to build a decentralized venture capital fund wholly driven by its investors. The idea was extremely promising, and investments in the company reflected this; its ICO ultimately raised $152 million in Ether by May of 2016.
A month after the coin offering, however, a loophole was exposed in the company’s smart contract system. This led to a breach in which hackers stole $70 million worth of Ether.
Because of this oversight, The DAO was dissolved while drawing concerns from the SEC. This ultimately led to new ICO regulations that are being enacted in the United States.
#3: Bancor
Bancor is a blockchain-based prediction market. This project serves as a means for cryptocurrency holders to generate liquid tokens that measure their own price and allow for conversions into other tokens to take place. For instance, users are free to purchase a Bancor token that is 50% Ether and 50% Litecoin.
Because of Bancor’s unique and revolutionary nature, the ICO was a substantial hit. During the investment period, Bancor drew the attention (and buy-in) from VC firm Blockchain Capital and early internet investor Tim Draper.
When the ICO officially closed, Bancor had generated more than $153 million in digital currency.
#2: Sirin Labs
Smartphones are one of the most prolific technologies in use today; however, they are also notoriously insecure. Sirin Labs sought to remedy this problem by becoming, “. . . the world’s leader in secure open source consumer electronics, bridging the gap between the mass market and the blockchain economy.”
Investors were clamoring to get their hands on the company’s proprietary token as the Sirin Labs ICO generated over $100 million in just 24 hours.
Over the next 8 days, the initial coin offering would pull in another $57.8 million in digital tokens, for a whopping total of $157.8 million.
While this is an astonishing feat, it is not the most successful ICO.
#1: Filecoin
It’s impossible to talk about hugely lucrative ICOs without mentioning Filecoin.
Filecoin is like Storj in that it seeks to revolutionize data storage. Filecoin utilizes blockchain technology to create a decentralized data storage network in which users are enabled to provide access to their servers and share their storage in exchange for Filecoins and other rewards.
Again, the easily understandable nature of this ambitious project resulted in massive appeal. Because of this, during its very first hour Filecoin raked in $135 million in various currencies (Bitcoin, Ether, Zcash, and traditional dollars). Filecoin ultimately went on to generated over $257 million in sales.
ICOs are a tremendously powerful way for a blockchain-based service to raise funds for a project, while providing investors with great potential for earning their money back, and then some. This space is still exploding, with more and more people looking to join the revolution.
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