ICO lost it, the Bubble Busted. IEOs to the Rescue to save Crypto Start-ups?
March 27, 2019The guy thought it was going to work. He was poised at delivering a product. But sad enough, the time has passed for Initial Coin Offering- ICO, the bubble busted a few months ago. That was what pushed him to sell off his entire product and hundreds of lines of code for just $60,000 on eBay. It’s quite funny but a sad story.
Sure you can relate to the now trending story of the owner of the yet-to-launch ICO that auctioned his product on eBay. Apparently, investors do not seem to trust ICOs anymore even if there is a product on the table. This is obviously because of past experiences of scams and failures. It is natural. There is a need for people to have third parties who can transparently screen and perform due diligence on a start-up before they can pull their funds into it.
This is the basic reason why crypto investors’ attention is moving towards IEO- Initial Exchange Offering. Both ICO and IEO are aimed at gathering funds for start-ups through public contribution. But the methods are different. ICOs gather funds through smart contracts and on-boarding through the created ICO website. IEO uses a crypto exchange as a medium to sell tokens to investors. Project owners pay a listing fee to a crypto exchange and a portion of their tokens. The crypto exchange then helps them to sell their tokens through the trading platform.
IEOs are really advantageous to both the investor and the start-up. Start-ups only need to pay a listing fee and some tokens to then exchange. The exchange will use its already formed influence to help advertise the ICO. There is no need to conduct KYC/AML for investors which may be cost implicating for the start-up. The exchange performs the KYC/AML procedure for the investor through the already made process- it is that easy.
Investors have lesser challenge trusting a start-up that wants to collect funds through an IEO since they trust the judgement of the exchange where it is to be launched. It is believed that top cryptocurrency exchanges will have done a thorough investigation and due diligence on a start-up before they launch its IEO. This is because they have to protect their reputation as it will definitely affect business if the start-up fails.
One of the greatest stories about IEO is the Bittorent initial sales that reached hard-cap within fifteen minutes of its launch. The Binance launch-pad really worked. Another record was about a start-up that gathered its hard-cap within seconds of its launch as an IEO.
Hopefully, the latest IEO trend will not be flawed as it will dent the image of exchanges. But for the time being, it is a big relief that cryptocurrency exchanges are taking up the challenge to help investors believe again in blockchain start-ups. This will drastically reduce the emergence of fake or scam ICOs. Soon enough, cryptocurrency investors will force all start-ups to run an IEO instead of ICO. This is to provide an extra layer of security and assurance for cryptocurrency investors.
This is no relief for investors as they still have to perform their due diligence on any project they wish to invest in.
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