Initial Coin Offerings (ICOs) are a new crowdfunding phenomenon that is making waves both in and outside of the cryptocurrency space. A recent report by Deloitte estimate that over 26,000 Blockchain Projects got started in 2016 and other estimates also put ICO funding near the $1 Bln mark for Q2 2017 alone.
Crypto and ICOs
The incredible amount of funds that have been gathered by projects doing Initial Coin Offerings has, in turn, attracted more developers and entrepreneurs, further increasing the number of ICO projects to a point where there is at least three new ICOs every week and it’s no wonder. ICOs allow project developers to gather funds without the need to resort to banks or VC firms which makes the whole process much simpler.
ICOs also provide additional advantages for those creating them like the chance to distribute their token on a global scale, increasing the value of their network in accordance to Metcalfe’s law, and the possibility of cultivating a vested community that can help market and develop the project globally.
Most recently, this new form of fundraising has been catching the eye of mainstream audiences and even celebrities with stars like Jayceon Taylor (The Game), Floyd Mayweather, and even Paris Hilton, all three of which have endorsed ICOs. Traditional investors have also become aware of ICOs and their potential as an investment vehicle with Goldman Sachs analyst Robert D. Boroujerdi and his team stating that “it’s getting harder for institutional investors to ignore cryptocurrencies.”
Positive news regarding the ICO scene have been abundant but not all is well. Several government institutions across the world have also taken notice of ICOs with many of them threatening to ban or regulate the fundraising mechanism. China has banned all ICOs and both the U.S.Securities and Exchange Commission (SEC) and the Hong Kong Securities and Futures Commission (SFC) have warned that ICO tokens may be considered securities.
Other places like Isle of Man, Switzerland, and Singapore have taken a more permissive stance and are becoming “hubs” for ICOs and blockchain projects. Although regulations, upcoming technology, and many other factors will play a big role in the future of ICOs, it’s clear that this alternative fundraising mechanism has opened new doors both for project creators and for investors alike.
Big Boy ICOs
Now, a new wave of ICOs is beginning to emerge from mainstream companies with considerable user/client bases. Although projects like Bancor, Filecoin, Tezos, and others have gathered an unprecedented amount of funds, reaching hundreds of millions of dollars, these projects are still unknown to most outside of the cryptocurrency sandbox.
So what happens when big companies like Aptoide or Kik join the ICO scene? Although many believe that there will be a blockchain “killer app” or a user interface moment that will take crypto to the mainstream stage, it may be the opposite. Mainstream companies may end up bringing ICOs to the spotlight, making cryptocurrencies and blockchain technology globally known.
A perfect example of a mainstream company entering the world of Initial Coin Offerings is Aptoide with the upcoming Appcoins ICO. Aptoide runs an Android app store that has over 200 million users, 800,000 unique apps, 12,000 publishers, and 70 different manufacturers and partners. In order to solve inherent problems found in the current App and Appstore ecosystem, Aptoide is launching the Appcoins protocol, allowing users to earn the APPC token by using the app and watching ads.
The system put forth by Appcoins will not only eliminate unneeded middlemen and associated fees, it will also introduce its millions of users to the concept of cryptocurrencies through an incentive-based model for developers and advertisers. The white paper reads:
The AppCoins network is an open and distributed protocol built on the Ethereum blockchain. It aims to mitigate the current inherent deficiencies of app stores. By marrying blockchain technology with app store technology, app advertising, in-app billing and app-approval can be drastically improved and sped up through disintermediation and redistributing the unlocked value to end-users and developers.
The Kin ICO, another popular example, was created by Kik Messenger, an award-winning instant messaging app with over 300 million registered users (as of May 2016). The ICO funded the development of Kin, an ERC20 token that will be integrated within the Kik app, allowing for trustless payments and incentives within the app itself.
By exposing the Kin cryptocurrency to over 300 million users, Kik is sure to introduce a large percentage of its user base to the concept of blockchain and the endless advantages it brings about. According to Ted Livingston, CEO of Kik, the use of a cryptocurrency token will create an alternative monetization model that does not rely on advertising, introducing a new incentive-based approach for developers that build apps and services that can “get user attention and create value”.
Can ICOs Make Crypto Mainstream?
Both companies, Aptoide and Kik are bringing cryptocurrencies directly to their millions of users and both of them are leveraging the Ethereum blockchain. However, their popularity is considerably higher than that of Ethereum itself as can be seen in the Google Trends analysis below:
In fact, these companies are bigger than ICOs themselves. When comparing the search terms “Aptoide”, “Kik” and “ICOs”, both Aptoide and Kik are more popular.
Despite the bad rep that some ICOs are getting, this new kind of fundraising mechanism can be the answer to cryptocurrency and blockchain mass adoption even if ICOs are only one of the many use cases for the technology.
In the future, as regulation continues to evolve, ICOs may become very different and serve multiple purposes. They may even replace their legacy counterpart, IPOs (Initial Public Offerings) completely, making for a fairer and more equally distributed economy where anyone can become an investor without facing the steep entry barrier that is currently in the way of average citizens and investment.
Can ICOs by big companies like Aptoide and Kik make ICOs mainstream? Will ICOs be the ultimate “killer” app for the blockchain? Let us know in the comments below.
Images courtesy of Google Trends, Pexels, Shutterstock