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Blockchain Editorial

Crowdfunding & Initial Coin Offerings

Initial Coin OfferingsĀ are an alternative form of crowdfunding that has emerged outside of the traditional financial system. This model has helped a lot of successful projects and companies get the funding required to start their business.Ā  In 2013, overĀ US$5.1 billionĀ were raised via crowdfunding worldwide,Ā which increased toĀ US$16 billionĀ in 2014 and was estimated at overĀ US$34 billionĀ in 2015.

An Initial Coin Offering is an event that usually extends over a period of one week or more and in which everyone is allowed to purchase newly issued tokens in exchange for established cryptocurrencies like Bitcoin or Ether.

In an ICO there can be a specific goal or limit for project funding, meaning that every token will have a pre-designated price that will not change during the Initial Coin Offering period, which also means that the token supply is static.

It is also possible to have a static supply with a dynamic funding goal, in which the distribution of tokens will be made according to the funds received, meaning that the more funds the project receives the higher the token price will be.

You can also have a dynamic token supply that will be determined by a number of funds that are received, meaning that theĀ price for each token is static butĀ every time one Ether is sent a new token is created. A limit can be set in terms of goals or time frame.

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