A person who is not accustomed or used to the terminologies of crypto industry, it is difficult to conceive the idea of initial coin offering or why the tokens are generated and how to assess an initial Coin offering. For a cryptogeek it is quite simple, for him an ICO is a tool that is used to trade future crypto coins which are exchanged for cryptocurrencies having instant or liquid value. This definition may be simple for a person who deals in all sorts of cryptocurrencies and has undergone various ICOs but when talking about a layman who has no sound knowledge of crypto, it may get complicated.
For your ease of understanding we have devised a simple example from everyday life which will be quiet helpful for you if you want to understand the basic principle of initial coin offering.
Example From Everyday life
Imagine you want to start a business of your own, you have selected the appropriate location for it, and you’ve also planned the interior and exterior design with the sort of items you are going to sale.
But, There’s one most important thing remaining …..
Without a handsome amount you cannot initiate your business, You must rent or purchase the place you have chosen, stock it with the items you want to sale and also hire some staff to tackle it the way you have devised in your mind.
Let us assume that you are an innovative person and you don’t want to get a loan from any one, you just want to initiate your own sum. For that purpose you produce your own branded product with some specific name say for example “BIT”. But you only generate it in a limited quantity of 1,000 pieces. Let us call each piece a currency, and customer won’t be able to buy that currency until they acquire them using special tokens that you’ll release gradually over the specific period of time following your business launch date.
If demand for BIT is high enough and if you succeed in making your buyers believe that its demand will continue to grow, that will automatically push up the price of the tokens generated in the future. These tokens would obviously sell for large sums and as a result you’ll raise enough money to launch your business.
You can make it further simple to say that first you offered shares for a company which you have not yet launched but you had developed a significant trust so public bought that share for the sake of investment. That was an Initial Public Offering from your side.
How To Apply The Same Principle To ICO?
The principle elaborated in the above example, is also behind an ICO. The same way you offered the public initial shares of your company, an ICO gives public the right to buy a product which exists in a limited quantity. The company offering that product has an option to sell its rights for a higher price.
The beauty of the above process and the thing which differentiates it from the prior IPO example is that it is supported by blockchain technology. This technology guarantees the authenticity of the tokens offered. In short ICO is a whole new way for businesses to raise money. According to the latest ICO news update, it has already been used to generate approximately 2 billion dollars.
How is ICO Risky?
Well, we have full trust on the blockchain technology but we have no issue in admitting that it can too be risky as compared to the Initial Public Offering. Let us see how?
First of all the most satisfactory thing about the IPOs is that they are well regulated. Companies which make such offers are lawfully bound to reveal all sorts of information about themselves before they make it fully public. It allows investors to make fair-minded estimations about their value. The main thing is that people making these investments have full knowledge about the Pros and Cons.
On the other hand people who invest in an ICO have comparatively less knowledge of what they are investing in and what will be the nature of their return. But it can be easy for you if you follow the following principles devised by our crypto experts:
Factors You Must Examine
- Is the admin panel team of that company experienced?
- Does the product offered by the company have a good market? If the product isn’t a hot item, there’s is no use to invest in it.
- You must have proper knowledge of the blockchain technology which is underpinning the sale. How many tokens have been distributed uptill now and what is their security level.
- The legal and regulatory stuff surrounding the company is safe or not?
- What are the terms and conditions outlined in the white paper and do they look fair?
We hope that after following these rules and regulations it will be easy for you to make a smart decision in terms of ICO investment, still we are waiting for your suggestions and criticism in the comments section below.
U.S. prosecutors have finally planned to submit their argument in an ICO Fraud. In fact it will prove to be an oversized argument. As we all know that Initial Coin Offering (ICO) refers to someone offering the crypto investors some new cryptocurrency units or crypto-token in exchange against cryptocurrencies like Bitcoin or Ethereum.
Background of that argument
Maksim Zaslavskiy is by birth United States citizen living in Brooklyn, NY. He is the founder of REcoin and Diamond Reserve Club. REcoin was designed in the form of an innovative token system where brokers, tenants and purchasers etc could purchase REcoin tokens to make easy a variety of real estate transactions. It was claimed that it will also allow users to enter into smart contracts – with the passage of time it all proved to be an illusion.
In Sept. 29, 2017 — the Securities and Exchange Commission (SEC) accused him with a fraud case investors in an initial coin offerings (ICOs).This fraud had a further links to investments in real estate and diamond industry. Maksim Zaslavskiy was being alleged that the digital tokens offered by him did not really exist.
That’s why In September 2017, the U.S. Securities and Exchange Commission (SEC) filed a suit against Maksim Zaslavskiy , and he was arrested and charged by the Department of Justice (DOJ) in November 2017. As the SEC suit stayed pending due to an outcome of that action, Maksim Zaslavskiy easily pled not guilty to the allegations filed against him. Now, it is in the news that Maksim Zaslavskiy is trying his best to dismiss the lawsuit against him. Maksim Zaslavskiy’s point of view is that tokens sold through an ICO are technically not considered as securities.
What is the statement of SEC?
The statement of SEC goes totally against Maksim Zaslavskiy. That’s the reason why the case of Maksim Zaslavskiy has set the stage for a U.S. federal court that whether token sales can be considered as securities or not.
Furthermore, the Department of Justice is going to submit a reminder that is expected to prove false the claim filed by Maksim Zaslavskiy. It is also in the news that this filing is expected to exceed the maximum size allowed by the court for such arguments, hence a request will also be submitted to grant an exception in that specific case. Though no further details on this topic are to be found elsewhere, however, it is being assumed that the filing in question will be an extraordinary one.
The majority of people nowadays already have an idea as to what is Bitcoin and how does it work. But no matter how much you know about this cryptocurrency, there is always something to leave you amazed. Here are the bitcoin facts.
In this article, here are some interesting Bitcoin facts for you.
Bitcoin amazing Facts:
Independent of Third Party Influence:
Bitcoin is an open-source software. Anyone – whether it’s the owner or just a random internet user – can access it. Also, there is no regulatory authority such as a central bank, government or private organizations to control the flow of Bitcoin which makes it inexpensive to use.
Nobody Knows Who Invented Bitcoin:
It has been nearly a decade since the Bitcoin first came into circulation. However, the identity of creator still remains a mystery. Several investigations and search works have been conducted but to no avail.
Some say a programmer named Satoshi Nakamoto invented it but there is no proof to support that claim.
Bitcoin Transactions Are Untraceable:
One of the unique features of Bitcoin is that the transactions are untraceable. Whether a user is trading coins across the street or sending them to the far edge of the globe, all he has to put forward is a wallet ID. The personal information is not required. As a result of this, the transactions become anonymous and downright untraceable.
If You Lose Your Coins, Consider Them Gone for Good:
Bitcoins are stored in a digital wallet and protected by a private key. So, if a user loses the drive on which the wallet was stored, consider your coins gone for good.
Bitcoins Are Accepted as A Method of Payment All Across the World:
Numerous banks, corporations, and retail stores accept Bitcoin as a payment and the number is increasing each day. Using this currency, you can buy comics, fancy clothes, yachts, property, travel around the world and order a delicious pizza.
Amazing, isn’t it?
The First Ever Purchase Made Via Bitcoin Was for A Pizza:
One of the most interesting facts about bitcoins is that the first ever purchase made through this currency was a pizza.
In May 2010, the currency was relatively new and was still pretty far from gaining worldwide recognition. Due to this fact, the value of bitcoin was extremely low – let’s say, two Papa Johns Pizzas for two Papa Johns Pizzas.
Yes, this was exactly the case when Laszlo Hanyecz offered two Papa Johns Pizzas for 10,000 bitcoins, which was then equivalent to $41 or $0.0041 per coin.
However, the circumstances have changed and those 10,000 bitcoins are worth $7.6 million in today’s market.
These are some interesting facts about the ever-incredible currency that is Bitcoin. In conclusion, the characteristics of cryptocurrency are nothing short of incredible! The future belongs to Bitcoin! So make your move and take a dive into the world of Bitcoin; right now!
Hong Kong securities regulator has once again warned the public about Initial Coin Offering investment. The deputy chief of Honk Kong SFC (Securities and Futures Commission), Julia Leung, repeated the previous concerns of perils related to ICOs, in a speech which took place on Friday.
While emphasizing that the interests of regulators lie in protecting the investment of public first, Leung said:
“While we acknowledge that innovative technologies such as blockchain have the potential to improve efficiency and financial inclusion, that does not entitle anyone to conduct fundraising from the public in violation of securities law.”
Obscurity for Investors
As Leung is the chair of the SFC’s Fintech Advisory Group, she claimed that it would be difficult for an average investor to decrypt the extreme-technical-content and obscurity of few projects that are in quest of fundraising, as she stated that it was more suitable for proficient investors from VC funds instead. Her remarks then drew the attention to projects that claim to use blockchain technology as a “slogan” to vow high-tech claims without any innovation to fulfil those promises.
Julia Leung also added:
“Many of these fundraisings are dubious, if not downright frauds. The issuers escape the scrutiny of the police or securities regulators because of their cross-border nature and the way the crypto assets are structured to fall outside any regulator’s perimeter.”
Warning Against ICOs
These comments pursue an earlier statement, in which guidelines were provided for ICO issuers that must be followed ahead of fundraising operation. Certain ICOs could be considered as securities as well, according to Leung. Since the scrutiny, the regulator has issued a warning letter to almost seven exchanges along with domestic presence, prompting them not to trade cryptocurrency tokens as it sees them as securities without a license.
The regulator said:
“The SFC will continue to closely monitor ICOs and will not tolerate any violations of the securities laws of Hong Kong.”
Seeing growing public interest, the authorities of Hong Kong launched a “public awareness campaign” at the beginning of this year to enlighten general public about the Initial Coin Offering investment and cryptocurrencies by using, articles, advertisements, and infographics.
In her speech, Leung also pointed out the volatility of bitcoin price and added:
“Many millennials who subscribe to digital tokens in ICOs5 understand that there is no intrinsic value in the tokens but are betting on the rapid rise of the token value in the secondary market.”
Bitcoin is one of the coolest cryptocurrencies out there. It provides complete anonymity and liquidity to the users. The currency first came into circulation in 2009 and has survived numerous attacks since then.
The terms used by the Bitcoin community are quite interesting and can evoke misleading images and ideas in public’s minds. All that mix-up results in skepticism which ultimately stops people from having a clear understanding as to what is Bitcoin and how to use it.
In this article, we have addressed the things that most people find confusing and misleading about Bitcoin. And we hope that it will help eradicate all the doubts in your mind and encourage you to invest in this incredible form of currency.
Common Misconceptions About Bitcoin:
The Currency Comprises of Gold Coins:
The first misconception that people have about Bitcoin is that it comprises of gold coins. And we can’t blame them. Because every time you want to fin bitcoin-related information, the results always exhibit a coin with the letter B and two vertical bars resembling the USD.
To your surprise, Bitcoin has no physical shape and only exists on immensely secured computers in the form of encrypted code. In other words, it’s a virtual currency and all the images you see are false.
You Keep Bitcoins in A Wallet:
When talking about Bitcoin wallet address, most people think that they are physical purses with sections to carry cash. But this is not the case with Bitcoin wallets.
The wallets store coins virtually. There is no physical way to use those wallets which leave the owners with a very few security risks.
In addition, the Bitcoin wallets use encrypted keys for coin protection and only the owner can have access to it – unless he/she decides to publicize the key.
Bitcoin Is Based on a Debit System:
Another misconception about Bitcoin info is that it works on a debit system. Meaning that you can spend the coins you don’t have. However, Bitcoin doesn’t work this way.
The currency uses a system called Unspent Transaction Output. The system enables the network to work out a user’s balance and authorize a transaction based on the number of coins available.
Miners Dig for Gold Coins:
A process called Bitcoin mining is the primary source of digging coins. However, the mining does not involve men using pickaxes to dig gold. It’s actually a network of computers where miners from around the world connect with each other through mining programs and work on solving mathematical algorithms.
Those who successfully solve the problems are then rewarded with bitcoins.
Bitcoin Is a Currency for Criminals:
The fact that Bitcoin offers complete anonymity often raises doubts in people’s minds that the currency is designed for criminals. Although this feature attracts a large number of criminals, the majority only use it for daily life transactions.
These are some Bitcoin-related misconceptions among the general public. It’s usually the beginners or people who have never been to the Bitcoin world where the false information originates. If you want to clear doubts, get in touch with an experienced user and do an extensive research on the topic.
Read our article on top 5 myths about Bitcoin.