Remarkably, initial coin offerings have inserted themselves deep into the global economy, their impact on the macro and microeconomic system can no longer be undermined. Within 4 years since the inception of decentralized cryptocurrencies, initial coin offerings have undoubtedly contributed to the global internet economy by a whopping huge percentile. To date, ICOs have raised more than $3 billion USD in crowdfunding.
While there are over 200 ICOs currently, with over a thousand in the queue waiting for the token sale event; the joke isn’t really funny as an estimated 600 other crypto projects have failed to deliver on their promised output. There is a speculative $5 trillion dollars’ transactional overview that could be recorded in the year 2023 from funds raised by ICOs. At this rate, if the system is kept unchecked, human vices could still corrupt the system rendering it impotent to the original advantages it conferred during its early days.
Ideally, the evolution of data processing and information computation has given rise to a new frontier of internet usage. While we move from value hinged on the application layer to the protocol layer where all blockchain transactions and operation reside, the new terrain presents itself with opportunities and difficulties the current knowledge base of technological advancements cannot handle at one grasp.
In other words, even with the evidence based practicality of the decentralized ledger technology and abundant plus currently expanding use case parameters, the entire system seems to still be under a ’theoretical purview’. It becomes a thing of concern to watch specialized con artist misuse and ridicule this economic and financial potential that could as well alleviate the globe from so much distrust and unaccountability that wrecks any booming economy.
Although, one might not be able to differentiate between scam projects, empty visions and mere amateurs who don’t just understand business ordeals. Even so, it would be careless of the government who were voted in to watch over the affairs of its citizens to ignore these procession. So the constant pressure from regulatory watchdogs is necessary to put a check and balance on the so called tokenization of digital assets and the sales of these tokens to the public on a global scale.
Crowdfunding: ICO offerings mimic the legacy initial public offering and crowdfunding systems. While IPOs sell off shares and grant investors staking rights in the company proceedings, ICOs simple guarantee backers a valuable return on their investment on commencement of the project and reward these backers with tokens (- the idea of a staking right in the project), other than their words, it’s not much to go on in an unregulated system.
The truth is, 99% of cryptocurrency projects don’t have much to offer, and they simply lure investors and cryptocurrency enthusiast into a pool of vanity. Not too long from when the ICO begins, there are setbacks, security challenges, blockchain instabilities, smart contract inconsistencies, and many more amateur excuses for a sophisticated system as the decentralized ledger technology. At the point of design, most of these tokens are the guise of securities and act as a scent to attract regulatory watchdogs. Sniffling through their documentation, it becomes clear that not much is offered, and contribute to the stifling challenges towards the mainstream adoption of blockchain technology.
Pros and Cons: Cryptocurrency isn’t entirely a bad idea; after all, a decentralized system is the most appropriate test environment for financial and economic regulators to test the limits and its appropriateness.
In a quoted research, it was discovered that ‘there are too many instances of blockchain and application and that there is too much confusion on the definition and its capabilities…’. Now that’s gibberish for too many undue complexities and unwarranted blockchain systems that erupt without having a cause to. Rather than have too many blockchain networks, the current systems can be improved upon with the objective of enhancing productivity and optimize functional output.
-Regulating a decentralized system
The regulation of decentralized systems can prove to be the angle to straighten things up in the cryptosphere. While ICOs may be maintained as the prevailing standard for crowdfunding, it would definitely be fused with traditional IPO functions and it would probably be ideal to address the term as ‘Initial Public Coin Offering’. Presumably, the blockchain model and application will take precedence as compared to the derivative p2p transactions, exchange platforms, and boring coins – as seen in the current patterns of most token sales.
China banned the operations of ICO. Justifiably, they were looking out for the welfare of their citizens and the integrity of their own economy, however, blockchain market hasn’t declined one bit – as of late, super bitcoin being one of the new forked derivatives of the bitcoin network protocol is currently spearheaded by Asian blockchain enthusiast.
Moreover, regulatory markups are being considered to fortify DLT systems before it is being implemented on national scales; countries have issued declarations stating how blockchain enterprise can be profitable to their economy and its bud could be an attractant to cross-border investors.
It is quite challenging to forestall the impending regulatory and standardization of blockchain enterprise as a whole. However, when it does happen a very important shift in the cryptocurrency ecosystem will occur where tokenized assets bearing false asset-identities and guised as securities will be revealed and either penalized or brought under jurisdictional purview. Compliance with regulatory policies might also cause certain projects to stand out.
On the side of token crowdsales, the remodeling of the system will be eventful; while some systems will be broken others will be made, the all-important detail will be which crypto or token will survive the hit and that will increase their worth, just like during the internet era.
Initial coin offerings will grow stronger as standardization involving policy and regulation will enable equality of both liability and legality; hence, its cocoon will be fully formed to protect the system against itself.