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ICOs are in Nascent Stage and Prone to Problems

ICOs are in Nascent Stage and Prone to Problems

ICOs Are In Nascent Stage and Prone To Problems

Initial coin offerings (ICOs) are in a nascent stage. Therefore, there is bound to be issues cropping up as it grows while steps should be taken to address such issues. The ICOs are also facing teething issues like any other thing. Therefore, it should not be totally ignored or seen as a fraudulent means of fundraising. Binance CEO, Changpeng Zhao, believes that ICOs are a necessary function for the digital currency market. His comments come in the wake of regulators tightening their screws on the market to protect investors’ interests.

Early Stages

Binance CEO thinks that the ICO market is in its nascent stage only and encounters teething problems. The fears of ICOs could reduce once the bad actors in this space are eliminated. This would enable genuine players to gain from the market. He thinks that most of the ICOs are having only fresh startup projects. That could be interpreted as having a higher rate of failure that is much similar to that of any conventional startups. He does not see any difference on this from the previous practice since investors of ICOs are well aware of this.

Therefore, Zhao thinks that ICO investors are only early learners or adopters. He believes that ICOs are attractive for several reasons. The first among them is that investors would be presented with a technical paper. As a result, ICOs players could access a big pool of people who could place a bet on the project’s technology. This is compared to the conventional VC investments attracting only selected investors. There is a potential threat that those VCs might not be able to see a bigger picture.

The outspoken businessman has always been a supporter of the cryptocurrencies and ICOs. He has also been known for taking a dig at the conventional markets and placed a strong belief on the digital currencies. Zhao compared the current virtual currency market with that of venture capital’s fundraising exercises, which were not that easy. However, the VCs find fundraising through the ICO route a hundred times easier, btcmanager reported. Though the regulators around the world have increased their surveillance on the ICOs, there does not appear to be any significant drop in it.

In a blog post, Binance CEO said, “Through my own experience, and watching hundreds of other projects at a close distance; I would say raising money through ICOs is about 100 times easier than through traditional VCs, if not more. With the ease of raising money increased, logic says there may be 100 times more startups, well-funded startups, where ICOs are allowed.” He believes that professional VCs often don’t have any clue about the sector that they invest in. Aside from that, their understanding of a project’s underlying technology is not enough.

Recognition of ICOs Potential

Binance CEO stated that the VCs have started recognizing the ICOs potential now. As a result, they are increasingly turning towards them. Zhao thinks that VCs react quickly to macro-investment developments compared to slow-to-react organizations. He summed up saying that those who move fast could reap exponential benefits. His advice is not to be left behind in the ICO and cryptocurrency market.

About the author

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Paul Walsh

Paul is the creator and host of ‘The Coinversation’, a podcast that focuses on the developments of cryptocurrency, interviewing a wide range of experts and entrepreneurs as well as building upon the work of Bitcoin Chaser’s analysts. To know more about Paul, follow him on Twitter.

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