Using Reverse ICOs to Tokenize Real Assets
Back in mid-2018, the world witnessed the end of long ICO trend, which helped many blockchain startups to raise millions of dollars with just a white paper and website. Although it was a great time for entrepreneurs to kick off their businesses, the growth of the crypto industry ceased due to the controversies and troubles that followed. Many news reports highlighted the decline in the investments, with over 90% of funded projects from the past years either abandoned or otherwise non-functional. Unrealistic goals and plans, and fraudulent schemes were the primary reasons behind their failure.
Whereas, a new trend of “reverse ICOs” has managed to attract significant attention in 2019. For those who are unaware of this new method — it is a process through which existing non-blockchain companies transition from a functioning centralized business model to a decentralized token-based model. The emergence of this new concept brings along some benefits that can give the crypto industry a positive spin.
Promises of Reverse ICOs
The reverse ICO first acquired people’s attention in South Korea in 2018. However, many anticipate that it will spread to other nations as investors continue to find worthy projects from tested firms that have successfully managed to achieve user growth and profit as well as technical IP and in-depth domain knowledge.
A company needs a working business model with users, technology and valuable partnership in order to pull off a successful reverse ICO, which marks as its primary advantage. This method also serves as a better alternative to the white paper model presented by most ICOs. The white paper does not assure product development and user acquisition. Hence, the projects could turn out risky and result in high consumption of precious resources.
Further, reverse ICO provides an edge in the industry by providing leverage in the adoption of the cryptocurrency. The method of buying and selling cryptocurrencies is still riddled with many difficulties, with technical and trust issues yet to be resolved. The process of providing existing users integration is not just convenient, but also a better option compared to generating a new user adoption.
For instance, a well-established company having a thorough knowledge of its customers can take the right measures to solve the issues that prevent users from purchasing their products with cryptocurrency. This approach will encourage customers to use cryptocurrency to buy products and services which they are accustomed to buying with fiat currency.
After witnessing turbulence in the crypto space due to the failure of many ICO projects, the concept of reverse ICO could be game-changing for the crypto industry.
