Initial coin offerings, more commonly referred to as ICOs, are an innovative fundraising mechanism in which new projects receive Bitcoin and Ethereum in exchange for crypto tokens that get value if the project turns out to be successful.
As you can see from the infographic below provided by BTXchange, this kind of fundraising opens up a lot of new possibilities for startups. However, there’s a big stumbling block that often gets brought up whenever discussions about ICOs take place.
Shortly put, ICOs have no regulation in some countries.
In other words, if you live in a country which has not yet introduced any regulations and invest your cryptos into an ICO that turns out to be a fraud, you have nowhere to submit a complaint, let alone get your money back.
However, many feel like the benefits of ICO by far outweigh the problems that plague this fundraising mechanism. For starters, unlike venture capital, literally anyone can participate in an ICO, which is something we never really had before. They also solve venture capital’s so-called “geography” problem as you can raise money from anywhere in the world.
While there’s no going around the fact ICOs have more than a few shortcomings, the truth is that a lot, if not all of these problems can be solved. In order to make a ruling on whether ICOs are worth the effort or not, however, you need to understand how this kind of fundraising works thoroughly.
With hopes of clearly presenting the nature of ICOs, the infographic presents you with both the good and the bad side of this revolutionary way to get funded and is a great resource for anyone who wishes to learn more about digital crowdfunding.
PLEASE NOTE: BitcoinPeople do not endorse any ICO’ S or encourage anyone to invest. Do your own homework and remember, ONLY bet with what you can afford to lose!
Original story found here