Initial Coin Offerings
Initial Coin Offerings, or Token Generation Events, are one way that people can raise capital for their projects, allowing them to sell cryptocurrency tokens.
Now, the legality of ICO’s is definitely becoming more stringent, as the SC has started to take action against those ICO’s that aren’t making the grade. In fact, after the DAO securities token failed, the SEC has started to look very carefully at ICO’s to make sure that they are following the law, and many people who use ICO’s or have purchased them have received subpoenas from the SEC.
For some companies, the response has been to limit their public token sales for those who live outside of the US. For others, the response is to create utility token ICO’s that would not be considered securities. The difficulty seems to be that these methods are used as fundraisers before there is a full project, which makes some people uneasy and means that the entire thing is a risk. Likewise, there are not many restrictions for non-security ICO’s, so some investors who are unaware and unexperienced may lose a great deal of their investment, which means that perhaps more SEC regulation is to be expected.
What is a Cryptocurrency Exchange?
If you’re just getting started you may not know what a cryptocurrency exchange is. Well, it’s actually any type of business that lets customers trade cryptocurrency for different types of assets or property.
This could be trading one type of cryptocurrency for another, trading cryptocurrency for fiat currency, and more.
So, instead of going to the store and trading money for goods, you’re going to an online or digital space and offering cryptocurrency (a different type of money) for something in return.
The History of ICO’s
Next up was DAO, attempting to create a type of decentralized system to use for future blockchains. But what was different here was that the people who purchased the tokens would have the ability to make additional governance decisions. The idea was to turn their tokens into utility tokens, which would then allow investors to have a more active say in what was happening.
Even still, there has been a lot of development in the process since this time. Most feel that these methods were unsuccessful, but they started something and definitely helped people to see how token building through Ethereum is definitely a huge accomplishment. And it’s a simple one as well. Which means t’s started to take off.