The creation of the blockchain, and with it the cryptocurrency, initiated a new technological revolution covering the world of technology and creating a new Internet. Cryptocurrencies have become the drive for the new Internet, a tool for the free transfer of capital and allowing for quick and more secure payments. Their creation led to a breakthrough moment in which every person can have real economic freedom guaranteed, and companies gain an efficient and quick way to raise funds for project development.
Cryptocurrencies give their holders the ability to control their own capital, guarantee protection against excessive interference of financial and government institutions. Thanks to this, every person who has their digital means can sleep peacefully and not worry about the fact that as a result of the economic crisis of the state, a bank account will be blocked, and with-it funds will be frozen on it. In the event of a financial crisis, cryptocurrencies are a chance to safely postpone funds, save money and reduce the risk of losing them, because the only person who has access to the funds is the owner of a private key to his wallet. It guarantees full security of funds and the lack of the possibility of taking over financial means by third parties, e.g., banks or governments. What’s more, cryptocurrencies have become a chance for quick transactions, as well as for anonymous transfers (e.g., Dash).
When talking about cryptocurrencies, one should not forget about the emergence of a new opportunity for fundraising by startups for the development of projects, as well as the entire enterprise. All thanks to the company’s initial coin offering (ICO). It is an extremely effective way to get financing and an alternative to making the company public on the stock exchange. ICO gives startups the opportunity to raise funds even in a few hours, thanks to the fact that there is no need to use intermediaries in the form of investment banks, brokers. All you need is the right software (it’s worth adding that it’s available on open source licenses), preparing the necessary materials and then announcing the start date for the token sale. Cryptocurrency publishing allows the company to get financing from every person and organization.
Company X decides to perform an initial coin offering to finance the project. It prepares the necessary materials (including the so-called whitepaper), channels of communication with the future investor community, as well as additional promotional materials. Then it publishes the information containing the date of the planned ICO. On the day of cryptocurrency publishing, each person, regardless of where he is located, as well as any organization (company, investment fund, hedge fund etc.), have the opportunity to perform a simple transaction – exchange of cryptocurrency (e.g., Ethereum) to tokens issued by a company that makes ICO. In this way, the company can get the necessary funds in a few hours. However, contrary to appearances, this is not the end, because it is possible to continue with financing. This means that X can get the funds it planned, and as a “bonus” an additional financial injection may appear.
The very existence of this method of raising funds has its impact on the condition of the state economy, because startups give the chance to obtain the necessary funds without having to focus mainly on financial issues, which is a problem when seeking funds through meetings with representatives of investment funds, in particular venture capital. This means that more and more enterprises are emerging on the market that create innovative solutions that, as a result, are fuel that drives the economy. ICO is beneficial for entrepreneurs and has a positive impact on the economy. For investors, it is also a great way to invest, because investors can come across specific projects created by specialists and enthusiasts, as well as eliminates fees related to investment management and eliminates a high entry threshold. It should be added here that the initial coin offering also provides the opportunity to observe projects during their development, allows you to invest any amount of money and allows immediate sale of tokens in the event of a desire to withdraw.
The fact is that the ICO market is still young, and thus still at an early stage of development. The result is the occurrence of fraud and investment failure. However, these cases also occur, for example, on the stock exchange, because there is no possibility that such situations will not occur. However, when comparing ICO and projects in which investment funds invest, primarily venture capital, it can be concluded that a larger percentage of ICO projects will be successful. You can ask yourself the question: how? Well, thanks to the quick and easy way to finance the project, the creators of these projects can focus on their development, and not on the search for financing through a traditional route. ICO allows you to raise funds sufficient to finance marketing, thanks to which these projects can gain faster users. Speaking of users, it is worth mentioning that investors are also often users. As a result, investors receive not only a return on investment, but also the possibility of using the project at the same time.
The governments of some countries have noticed the potential of initial coin offerings. They have introduced regulations that are friendly to entrepreneurs and investors in order to protect investments, increase the level of trust in the ICO market and ensure full legality of financing projects using ICO. A model example of this type of regulation may be the law introduced in Estonia, Malta and Switzerland. Legal regulations have been created for investors in order to ensure investment protection and transparency to prevent cases of financial fraud. At the same time, entrepreneurs were also guaranteed investment security as well as the legal recognition of this method of obtaining financing. The ICO regulations additionally include the issues of cryptocurrency exchanges on which ICO tokens can be traded on exchanges that meet relevant standards contributing to the growth of trust and the level of security – something that is extremely important in the world of investments.
We can say that cryptocurrencies have become a revolution that drives the new Internet, guaranteeing greater economic freedom, security of funds and a tool that allows companies to obtain necessary funds quickly and efficiently, and even an additional injection of financing. As a result, startups have the opportunity to create projects requiring financial inputs and faster, more effective entry on the market.