History Lessons And Rules Revolutionized,- A ‘Re-Evolution’
The history of the crypto market’s development comes in stages indicating waves of capital attraction at each stage by design. Here is a recap of sorts:
Born in 2017 — ICO
“initial coin offering” is a form of raising capital of startups in the crypto market through the issuance of tokens on platforms such as ethereum, NEO, EOS, and many more which were initially made available to anyone willing to buy.
Most countries do not or barely regulate ICOs and are seen as “incentive countries” to build crypto projects for that reason. This includes Singapore, Malta, Switzerland to name a few. The implementation of ICO investment is considered as a form of venture capital investment, without most legal constraints in those territories.
Maybe you, dear reader, are still impressed by staying up late at night to buy coins and tokens which are automatically thought of as gold by many and just buy them in hopes of their value increasing by leaps. That was the ICO trend. When this new way of raising funds was born, it solved many negative aspects of the current ways. It looked very promising, because Blockchain technologies seemed to be eliminating payment intermediaries, lower cost of cross-border payments (remittance), enable anonymity in transactions, immutability in the information storage (ledgers) and high security (given the chain/ smart contracts were properly audited).
Indeed, that is the promise of Blockchain, Crypto and of course Bitcoin.
Rumors alone that a coin finances great technology, brings great potential in the future and especially soon and on it’s own is an extremely difficult premise. If you own a coin, the value will increase from 5 to 10 times or fall by that amount. It is highly volatile. In fact, many people buy very cheap coins for literal cents and manage to sell them for $1 to 2$ immediately. A short-rise-gamble strategy usually attempted with bot-powered crypto trades.
There is an endless plethora of coins to choose from such as ETH, ADA, SC, BNB, NEO, GAS and many more including MLM coins. Everyone took the bait. Risk a few dollars and make millions was the sentiment. However, money is not easy to make. When many scam projects were born following the same template, people started to recognize the patterns, but continued to invest for reasons such as sunken cost fallacy — until it all crashed, and it crashed hard. In the third quarter of 2017 the signs started showing, yet the hype grew peaking at the end of 2017 — early 2018, the monument when one of the biggest projects, Bitconnect, collapsed. Bitcoin had reached at the time all time high of $20,000 and then fell drastically to barely more than a tenth of its former worth.
The cryptocurrency bubble had burst. Looking back at that scene it bears resemblance to the dotcom bubble of the past. Because nobody could properly price the new
technology, a bubble formed. The dotcom bubble, which led to the stock price rising too high, caused even seemingly unbreakable giants like Nescap, Amazon and Microsoft to take big hits. The ICO bubble burst at the end of 2018, after which the ICO craze officially died.
In 2018 — STO “security token offering”
came into the spotlight. Made to abide by the rules, those tokens were hard to issue and even harder to sell leading to them never really taking off. Security Tokens are often presented a tokenized version of going public, but can in actuality be any form of tokenization like a digitalized gold asset. In STO, a company will issue security tokens to its investors. Security tokens can be described as IOU (I owe You) secured by assets, though it goes a bit further than that. These tokens are considered as shares or verified representations of ownership confirming the holdings of investors. Depending on the issuer, this includes receiving periodical dividends and voting rights.
Compared to ICOs, STOs give investors more secure benefits since tokens are guaranteed with assets, but since STOs are highly regulated by governmental bodies, they are often similarly hard to pull off — albeit while being a lot cheaper and efficient.
Alas, the number of projects with STOs remains very limited.
In 2019 — IEO “initial exchange offering”
hit the market and deflated it. Essentially the same as an ICO, they are a rebranding attempt in essence. The same in green, except this time an exchange is involved more openly to try and earn people’s trust. Capital raising projects like these are still appearing, but rarely in the form of ICOs. Top crypto exchanges trading volumes such as Binance, OKEX, Houbi are usually the target hosts for such IEOs. With ICOs, the coins/tokens are sometimes not listed on any exchange or only with a few minor ones unlike IEOs which usually only go for the big fishes.
Examples include BTT, CELR, PERL and MATIC. These coins multiplied by a factor of 2 sometimes even 5 or higher. However, these projects have since become known as cash grabs rather than attempts to create a project or actualize an idea, leaving many investors at a loss. After 2017, the market has simply lost its excitement for the next big coin with a few exceptions such as Shiba Inu Token. Doing an IEOs is not cheap and many projects doing them do so without any backup or alternative plan. When they realize that the IEO doesn’t make them money just because, they are often out of option and halt operations altogether.
In 2020–2021 a new form, IDO appeared.
In essence calling for capital through dApps. The advantage for the users is that they connect their personal wallet and invest the way they choose in a more accessible way. It’s far easier to buy/do without additional lengthy sign-ups and verification on top of the original ones done for the wallet which has helped more realize blockchain technology based projects.
In terms of meeting industry standards, or appearing more appealing, existing products that have been developed to bring to the market and have users are now the core of marketing campaigns. Decentralized Apps i.e. dApps are usually operated by Smartcontracts, automated p2p codes which execute upon conditions being met without a third party intervening. The projects participating in IDOs are often composed of a vast network of voters rather than a small team which is to help the project work without a head per se, but just because many voted for something doesn’t make it good and how qualified the individual voter is always stands up to debate.
A new bottle filled with the same old wine. Still selling the same ideas, rarely is it a valuable business plan. Even rare is it actualized realistically. Lots of potential risks. Whether IDOs are really better compared to the old models or not won’t show until the end of the current cycle of the crypto market.
Finally, there is the new trend, ITPO
While they might seem like IDOs at first glance, they do not choose to decentralize the governance area i.e. have every decision be made by a big pool of voters. That’s because it depends on whether adding more regulations and operating policies is practical. In practice human factors such as opting for sustainable development and risk aversion for both investors and project stakeholder are combined.
It is more akin to a traditional crowdfunding platform using Blockchain technology and meeting industry standards of this specific niche for cryptocurrencies and smart contracts which is why it is called Blockchain Based Hybrid Crowdfunding.
The market is always upgrading, and there will be more sophisticated forms, ways and trends to help projects raise their capital to develop their projects. But one thing is for sure, the current market has matured, comes with higher standards and projects have to produce new valuables to stay in the ring. After the bubble, many projects that represent the crypto space contain Memes, classics like Bitcoin and few newcomers usually growing slowly in the background. Of those, only the brave will be cut to be a fit for the representation of the blockchain industry’s new dawn. Alas, it’s for ITPOs to promote the new blockchain industry state of affairs.
