Ruben Merre
Published in
10 min readMay 22, 2019


ICO 101 — History of Initial Coin Offerings (ICOs)

PART 1— From MasterCoin to Ethereum

0. Introduction

Dear Reader,

This article is part of a full-fledged series on Initial Coin Offerings (ICOs), Initial Exchange Offerings (IEOs), Decentralized Autonomous ICOs (DAICOS), and Security Token Offerings (STOs), and finally: IDOs.

You can find the overarching PART I here:

And PART II here:

And PART III (Evolution to IEOs and IDOs) here:

Happy reading!

1. Origins of the ICO — Where it all started. And no, it was not Ethereum!

2013. BAM! After quite silently working on his idea for two years, this guy J.R. Willett pops up on the bitcointalk forum explaining a supplementary protocolto Bitcoin with built-in support for a.o. custom tokens, a distributed currency exchange (think DEX), distributed betting (no need to trust a website to coordinate bets), smart property tokens, and more! In brief, a protocol — called “MasterCoin” — that would leverage the existing Bitcoin blockchain by adding additional features and possibilities to it.

Obviously, Willet needed to fund his idea so he kindly asked for some BTC donations here and there (sounds familiar, right?!). In order to motivate potential investors in actually contributing, he also added that several features inside the protocol would only be available to those actually owning MasterCoins. Et voilà, wise mister Willet introduced us not only to what was coined afterwards as the first ICO, but to the first utility token as well. Now that’s getting two sons in law with one daughter! (my fancy way of saying “killing two birds with one stone”).

See Willett making his mark in crypto history in the video below; it should start automatically at 4min30sec:

Willett: “If you wanted to, today, start a new protocol layer on top of Bitcoin, a lot of people don’t realize, you could do it without going to a bunch of venture capitalists and instead of saying, hey, I’ve got this idea, you can — you’re familiar with Kickstarter I assume? Most of you? You can actually say, okay, here’s my pitch, here’s my group of developers — there’s a lot of developers in this room. If you get a bunch of trustworthy guys together that people have heard of and say, okay, we’re going to do this. We’re going to make a new protocol layer. It’s going to have new features X, Y and Z on top of bitcoin, and here’s who we are and here’s our plan, and here’s our bitcoin address, and anybody who sends coins to this address owns a piece of our new protocol. Anybody could do that. And I’ve been telling people this for at least a year now because I want to invest in it. I don’t have a ton of coins, but that’s where I want to invest my coins. And I’ve yet to find somebody who wants my coins. Does anybody in this room want my bitcoins because I want to — ”

Total raised: US$600K

Fun facts (& thank you Eric Wall for writing a whole Twitter feed about this)

  • The MasterCoin protocol turned out to be incredibly successful. Rebranded to and known today as “Omni Layer” (#OMNI), it now serves as the underlying protocol for the Tether token (#USDT), which is the most traded crypto token after BTC itself.
  • The total funds raised in July 2013 peaked at approximately 4740 BTC, that’s a lot of Bitcoins. At the time worth around US$500K, today somewhere around buttloads of money.
  • The MasterCoin (#MSC) tokens themselves failed to find actual usage within the protocol. Apparently, “requiring users to hold tokens in order to access basic features is bad UX, horribly inefficient & unnecessarily complex”.
  • The #MSC coins still exist today with no purpose, no plan. Nevertheless, in the 2017 mania, they joined in on the great irrational pump to the moon, from US$4 to US$123. Now they are resting at US$7 a piece. Who knows what the future will bring…

Very noteworthy:

Unlike how most ICOs market themselves, Willett was actually super transparent (what a delightful contrast!) in listing and communicating the risks of investing in his ICO. Read for yourself in the excerpt below:

2. The remarkable second — NextCoin

NextCoin (#NXT) is a peculiar second when we talk ICOs. On 28 September 2013, the further anonymous member BCNext created a forum thread announcing the proposed launch of “Nxt” as a second generation cryptocurrency. He asked only for very small bitcoin donations in order to determine how to distribute the initial stake. A couple months later, on 18 November 2013, the fundraising for Nxt was closed. The initial coin offering “successfully” — as it wasn’t the objective to raise tons of money — collected 21 bitcoins that were worth roughly USD3,000 — US$17,000 at the time (depending on the exact timing you take as BTC experienced a little surge in the period).

Today (early January 2019 as of the initial writing), NextCoin hoovers somewhere just outside of the top 100 on coinmarketcap at a valuation just under US$30M.

Total raised: US$16.8K

Fun facts

  • NextCoin was/is the first cryptocurrency that purely relies on the Proof-of-Stake (POS) consensus mechanism.

3. A tiny 3rd — The CounterParty token sale

Ranked 339 today on Coinmarketcap at US$6M, CounterParty (#XCP) is often even omitted from the list of pioneering historical ICOs. However, CounterParty is actually the 3rd ICO ever, so I would argue that still deserves a special place in this introductory list.

Simply put, XCP is used to provide functionality where it isn’t technically possible to use BTC. For instance, XCP is the currency used to pay for the execution of all smart contract code (whereas Bitcoin by itself originally has no such smart contracting possibility). More generally, XCP represents stake in the Counterparty protocol, and is the voting currency for changes to be decided on by the community.

If you want to know more about it, the site explains it better than I do:

Noteworty: YouTube video on CounterParty and the Asset Revolution with Chris DeRose at Coins in the Kingdom 2014:

Total raised: US$1.8M

Fun facts

  • At the top of the previous bull market (January 2018), XCP peaked at around $US240M.

4. A strangely named 4th: MaidSafeCoin

MaidSafe might seem like a strange name at first. But it actually just stands for Massive Array of Internet Disks, Secure Access for Everyone. So don’t go complaining about the abbreviation! The weird name didn’t hold it back from raising a considerable amount of funds back in the days though. #MAID raised a US$7M equivalent in funds in its token sale.

Standing on the shoulders of giants, the SAFE (“Secure Access For Everyone”) network hoped to (and is still working today towards) combining the features of history’s famous decentralised networks the likes of Napster, Freenet, BitTorrent, and Bitcoin, and it aims to provide the following features:

  • Fully encrypted data storage and file sharing
  • Ability to use the network anonymously
  • Censorship resistant communication
  • Serverless data
  • Scalable cryptocurrency free from transaction fees

The SAFE network ultimately wants to “create a secure, autonomous, data-centric, peer-to-peer network as an alternative to the current server-centric model. For more info I kindly refer to the Coincentral article.

Today, it proudly holds a top 100 position on coinmarketcap, worth around $US64M at the time of writing. As you can see, its price is not only expressed in BTC, but also in OMNI (i.e. in Willett’s MasterCoin successor #OMNI for the less attentive!)

Total raised: US$6M

5. The practically forgotten 5th? — Swarm

In July 2014, this project Swarm raised US$800K in its token sale. However, it is hard to find any information on it. Some more recent endeavours have likely overshadowed the project. For instance (#SWM), which is a Security Token Offering platform (STO — we’ll talk STOs in a jiffy, well… in part II) that completed its token sale end 2017. Then there is Swarm City(#SWT), where Ngrave’s CTO Xavier Hendrickx currently holds the CTO position as well. Swarm City completed its ICO end 2016.

Total raised: US$800K

6. Enter the real deal: Ethereum

2014. Barely old enough to drink by American standards, the Russian “lad” Vitalik Buterin tries raising funds for a new and noteworthy ICO for what he envisions the world’s first zero-infrastructure platform, named “Ethereum”. The token sale raised 3700BTC in the first 12 hours, now who wouldn’t want that?! And as you can see, it can buy you some nice T-shirts!

Total raised: US$18.3M

Fun facts

  • Ethereum’s ICO token price on 31 August 2014 was 0.31USD. In the following years, the market value of 1 single ETH exploded to over 1,400USD in the craze of 2017. That’s a percentage increase I have difficulty with to fathom at times.
  • The raise occurred in the middle of a considerable Bitcoin bear market.
  • Ethereum has risen to the typical top 3 in crypto in terms of market cap, together with Bitcoin and Ripple. It generally holds a steady 2nd place.
  • Meanwhile, since Ethereum’s inception, over 1,000 so-called “ERC20” cryptocurrencies have been issued on the platform since its initial ICO. ERC20 itself is a protocol standard that defines certain rules and standards for issuing tokens on Ethereum’s network and infrastructure. ERC stands for Ethereum Request For Comments and 20 stands for a unique ID number to distinguish this standard from others.
  • In 2016 a decentralized autonomous organization called The DAO, a set of smart contracts developed on the platform, raised a record US$150 million in a crowd/token sale to fund the project. The DAO was exploited in June when US$50 million in Ether were taken by an unknown hacker (now that’s a heist!). Subsequently, Ethereum was split into two separate blockchains (a so-called “forking event”) — the new separate version became Ethereum (ETH) with the theft reversed, and the original continued as Ethereum Classic (ETC).
  • Solidity, initially proposed by Gavin Wood in August 2014, is the primary programming language (contract-oriented) used on the Ethereum platform. Most people who are slightly into crypto have definitely heard about it. However, if you ever find yourself trapped in a crypto-quiz, do remember that Serpent, LLL, Viper, and Mutan are other relatively popular languages when interacting with the programming interface called “Ethereum Virtual Machine” (EVM).
  • Vitalik picked the name after browsing Wikipedia articles about elements and science fiction. When he found the name, he “immediately realised that I liked it better than all of the other alternatives that I had seen; I suppose it was the fact that sounded nice and it had the word ‘ether’, referring to the hypothetical invisible medium that permeates the universe and allows light to travel.”
Initial Coin Offerings — From MasterCoin to Ethereum

Note: Quick 2021 update by the author: please find the latest article on IDOs (Initial Dex Offerings) and how ICOs evolved into them right here:


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About Ruben and NGRAVE:

Ruben Merre is a repeat tech entrepreneur, polyglot, life-long learner and founder and CEO of NGRAVE, the digital asset security company behind “ZERO”, the most secure cryptocurrency wallet in the world. Since 2018, Ruben and his team have partnered up with the top tier in nanotechnology, cryptography and hardware security, as well as thought leaders such as Jean-Jacques Quisquater, famous cryptography professor and second reference of the bitcoin paper. The result: a true end-to-end solution for managing digital assets, at maximum security (EAL7, highest security certification in the world), and an intuitive user interaction.



Ruben Merre

Co-Founder & CEO NGRAVE | | Protecting Your Private Keys From A — Z. The Coldest Wallet.