With Initial Coin Offerings (ICOs) skyrocketing in popularity over the past year, a lot of investors have turned their attention towards the cryptocurrency market. It hasn’t been all smooth sailing, however, as many projects fail to fulfill investor’s expectations. Some ICOs have even proven to be outright scams. Reverse ICOs, on the other hand, tend to bring much more substance and solid grounds for a sound financial investment.
Lucrative Yet Risky Market
Initial Coin Offerings are undoubtedly performing brilliantly in the first six months of 2018, having already raised more than $11 billion according to Coinschedule. A total of 490 projects have emerged in the first two quarters of the year alone.
Nevertheless, being fairly new on the market and not yet fully regulated, ICOs have also turned out to be a rather risky investment. Many of them have turned out to be flat-out scams, while a wide range of the projects have failed after the fundraising rounds are through. This has attracted serious regulatory oversight, with governmental structures already cracking down on them.
Yet, the innovative financial model reveals a lot of advantages over traditional VC investments. What if there was a way to overcome the issues that cause traditional ICOs to fail while keeping the model they bring to the table? Well, the so-called reverse-ICO might just accomplish this seemingly challenging task.
What is a Reverse ICO and How is it Different?
Standard ICOs, the ones that we are normally used to seeing emerge on the market, are commonly put together by startup companies without a lot of market history. They are characterized by the lack of existing products or services, and instead, have a seemingly comprehensive roadmap and a business plan which lays down the path to potential success.
Reverse ICOs, on the other hand, are organized by existing and established companies that usually have long-standing history on the market. Instead of using the ICO fundraising model to kickstart the company, they are taking advantage of it to expand their existing service or product list by harnessing the potential of blockchain-based technology. It allows them to decentralize a certain part of their structure, bringing exciting market disruption opportunities.
A Range of Advantages
Reverse ICOs reveal a lot of benefits compared to traditional coin offerings, mainly due to the fact that they build on something which already exists. The benefits, however, are many:
Enhanced Value Proposition – Both customers and investors receive enhanced value proposition from a reverse ICO. The company that is putting it together already has an established user- and customer-base, hence, market entry is a lot easier and facilitated in advance.
Existing Infrastructure – A company’s infrastructure is arguably among the most important aspects of a successful business. With reverse ICOs, the project relies on an already established team of professionals who, most importantly, are presumably used to working together. This gets the productivity juices flowing a lot quicker and easier.
Significantly Reduced Risks – As outlined above, a lot of the traditional ICOs – an estimated 20% – turn out to be scams. Others fail due to a range of reasons, the most common of which are lack of comprehensive strategy, proper team, or simply not enough funding. With reverse ICOs the risk of a failed project due to the above reasons is close to non-existent. Remember, it is an established company which is harnessing the prominence of blockchain technology to further expand its capabilities.
Proven Track Record – Existing companies, unlike startups, have a measurable track record. Investors can easily take a look at their performance over time and determine whether or not they are worth investing in.
Where Do I Find These Reverse ICOs?
While the market is undoubtedly flooded with traditional ICOs, reverse ICOs are starting to appear with growing frequency. One of the best examples is the PlayChip ICO, a utility token that will underpin an online gaming ecosystem that includes multiple platforms, including PlayUp, a well established – and profitable – fantasy sports platform.
The PlayChip Ecosystem has an existing user base of more than 500,000 people as well as six highly active fantasy sports and sports betting platforms. All of these platforms are ready to integrate the PlayChip token, which will be issued through the ICO.
Going even further, the PlayChip Ecosystem is right on schedule to generate $430 million in turnover this year, positioning it as an established standout among its existing competitors. Adding to the project’s potential, PlayChip recently won the “Draper Hero’s Choice Award” at the Blockchain Economic Forum in San Francisco in June 2018.
The event included a range of notable speakers including Canada’s former Minister of Finance and Minister of Natural Resources, Poland’s Minister of Finance, and others. Cryptocurrency tycoons like Tim Draper, prominent Bitcoin bull and founder of DFJ Fund, LinkedIn co-founder Eric Ly, and Bitcoin Foundation’s Vice Chairman Bobby Lee were also in attendance.
PlayChip managed to impress the esteemed crowd in an ICO pitch competition, shining above the rest of the promising projects. It is also worth noting that the project had a private seed round which sold out in just a couple of days, further attesting to its potential.
You can learn more about this promising reverse ICO project on its official website. Currently, PlayChip tokens are being sold with 30% discount. You can also join the live discussion group in the project’s Telegram channel.
What do you think of PlayChip Ecosystem and its march onto the crypto field through its PlayChip ICO? Don’t hesitate to let us know in the comments below!
Images and media courtesy of PlayChip, Shutterstock