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What is an Initial Coin Offering and How Does it Work?

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Re: What is an Initial Coin Offering and How Does it Work?

#11

Post by deepvibrations »

paulgb wrote: post #6

> An IPO is a onetime sale with multiple intermediaries involved in the process of determining the conditions, pricing, etc., whilst ICOs can have multiple rounds of fund raising [...] The rounds aren't really "initial" after the first one though, are they.

Token Distribution might be a better way to phrase it. At least this is how Eos named their fund raising- it takes place over 341 days, launched a few days ago and has already raised over $600M...Crazy times! Anyone investing should be careful, as there are a lot of scams out there.

Re: What is an Initial Coin Offering and How Does it Work?

#12

Post by Subcide »

fiatjaf wrote: post #3

In the past history of ICOs, did anyone gain from participating in the ICO more than they could have gained by buying the coin later in an exchange?

Yes, though usually not by just holding. ICOs with small caps often list on exchanges at a decent % profit in the first few days, while the people that missed out on the ICO buy in. The link the other user posted obviously doesn't take this into account, and only tracks holding the token indefinitely. In all likelihood, a LOT of people profited on the ICOs that ICOStats lists as negative right now.

Re: What is an Initial Coin Offering and How Does it Work?

#13

Post by ksahin »

silverbax88 wrote: post #8

FTA: ICOs conclude once the coins or tokens are tradable in the open market. This is a part that has eluded me thus far: how are the new coins tradable on the open market? I'm genuinely asking - most exchanges don't support all crypto coins, and certainly not the dozens of new ones being created. How does one invest in an ICO and then 'cash out'? I see the ROI stats on some of these ICOs but I'm curious as to if thos…

Almost all these ICOs are made on the Ethereum blockchain, there is a standard that almost all ICOs uses which is called ERC20 : https://theethereum.wiki/w/index.php/ERC20_Token_Standard Exchanges knows how to deal with ERC20 tokens so sometimes theses token hits the exchanges 5mn after the ICO is over (exchange like liqui.io or Bittrex). So no people are not sitting on their ROI since there is liquidity for these tokens

Re: What is an Initial Coin Offering and How Does it Work?

#14

Post by nikolay »

I'm tired of these scams. Worst of all, tech guys are getting involved. We are like chemists going into drug manufacturing or physicists making A-bombs! But, of course, this is not much different than the plethora of iFart apps or brainless startups that steal money from investors, essentially, and then they crash like there's no tomorrow. At some point, HN didn't pay much attention to these, but recently there's a new wave of the crapto attack, and this no longer is my oasis from the world's bullshit that's echoed pretty much everywhere.

Re: What is an Initial Coin Offering and How Does it Work?

#17

Post by beager »

Subcide wrote: post #12
fiatjaf wrote: post #3

In the past history of ICOs, did anyone gain from participating in the ICO more than they could have gained by buying the coin later in an exchange?

Yes, though usually not by just holding. ICOs with small caps often list on exchanges at a decent % profit in the first few days, while the people that missed out on the ICO buy in. The link the other user posted obviously doesn't take this into account, and only tracks holding the token indefinitely. In all likelihood, a LOT of people profited on the ICOs that ICOStats lists as negative right now.

This sounds like the same dynamic that institutional investors use on IPOs, where only privileged players get to buy in the IPO, and they sell through a pop fueled by hype or an underestimated target. Shares hit the general public and by the time you've got a few quarterly calls in, the true value is set and the long road begins, while the institutionals and earlier investors have already cashed out some good gains.

If democratizing access to ownership offerings for the purpose of quick sell off is the major benefit of ICOs, what does this do for serious businesses? Why would they choose an inherently less stable and less secure (cf. DAO hack on Ethereum) medium if it primarily benefits the investors and not the company?

Beyond that, it remains to be seen what IRL innovations can be enabled by ICO, whether more easily or necessarily vis a vis traditional fundraising vehicles.

Re: What is an Initial Coin Offering and How Does it Work?

#18

Post by fowlerpower »

A lot of people are calling these things Scams. People arent wrong and to a certain degree they do attract the "quick buck" type to them. Keep in mind though that these are also very useful for companies to get the Digitial Currency and block chain into the hands of the masses without some of this money, which large parts of that may be burned, will yield some killer apps.

The people doing an ICO do it to raise a bunch of money, much like a kick starter campaign. The people buying an ICO buy it for a quick buck and a lot of times they end up selling these coins from the ICO for 10x, see BATs.

The allure for people starting a company is that you can raise millions and give 0% of your company away. Some people will scam, it's true maybe a lot will, but some will undoubtedly start something big and will want to do more than just scam.

Re: What is an Initial Coin Offering and How Does it Work?

#20

Post by richardknop »

fowlerpower wrote: post #18

A lot of people are calling these things Scams. People arent wrong and to a certain degree they do attract the "quick buck" type to them. Keep in mind though that these are also very useful for companies to get the Digitial Currency and block chain into the hands of the masses without some of this money, which large parts of that may be burned, will yield some killer apps. The people doing an ICO do it to raise a bun…

Call me when a single of these projects that raise a ton of money from ICOs actually delivers and becomes a success. So far we have seen a lot of no strings attached cash given away to people with just an idea who would never raise money from real investors. I think it's a ponzi scheme. As far as people selling ICO tokens for 10x price, only a small number of people can logically do that and it relies on influx of new buyers. Usually after listing of your token on exchange you get a fresh infusion of speculators and gamblers which allows the earliest investors to cash out but most people end up losing money.
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