How the ICO is Evolving (or De-evolving)

By Rory Piant 6/8/2017

Change is inevitable in world where the cutting edge of technology is sharpened and shaped every day. Change indeed occurring in the world of Initial Coin Offerings (ICO). This all started just last week the BAT ICO sold out in less than 40 seconds. Individuals were investing upwards of 13 million dollars and one can argue bought a controlling stake in the coin cap. The community was dismayed because most did not get a chance to participate, and the idea of decentralization was replaced with profit. This resembled what we would typically find in an Initial Public Offering in the stock market for some new tech company promising life altering connectivity and ease of use.

So big business or should we say big venture capitalists are now involved. I think they have been for some time, but were merely dipping their toes in the market. Now that they see the water is fine, they are starting to fully commit. So now what? How does a new ICO prevent itself from being taking over by a few Moby Dicks (large whales that you will never catch) and big business?

One solution was created and enacted by folks at Bancor. They created a 1 hour uncapped entry zone where all deposits would be accepted. The idea being whales could no longer take a controlling interest simply because they have no idea of knowing how much to buy. In addition, the common man gets his chance at investing in new emerging ideas and technology. I was on Slack during the announcement and it was far from pretty. Many people felt it was a cash grab and would likely result in a cap of being nearly 200 million. The ability to buy in a flip (immediately sell your coins on the exchange for a 3-5x profit) was thrown out the window. In addition, those that had participated in the pre-sale felt the rules had been changed and wanted their money back.

What is the solution when people start to understand that real money can be made an on ICO? Can we fault large investors from wanting to participate? Some would argue these large investors help bolster the market adding a sense of stability, which is of course until they control so much they can pump and dump the coins at leisure. Bancor tried something new, and was insulted, cussed at, and vilified on Slack and Reddit.

The Status ICO is attempting to prevent the influence of large whales by creating a dynamic ceiling where a series of “hidden hard caps” will restrict further investment until the hidden hard ceiling can be met. So individuals can participate throughout the ICO, but the maximum contribution amount is restricted until the next tier is revealed.  This is all in place to discourage whales from controlling the market as they will have to make many small investments which will prove too costly and time consuming to manage.  Is this the answer? I think we will find out June 17th.

Regardless, educate yourself and talk to family and friends. If they cannot understand the ICO or what the company is trying to accomplish take a very cautious approach.  To start your own research, please follow the links below:

ICOs mentioned
Basic Attention Token (BAT) – https://basicattentiontoken.org/
Bancor – https://bancor.network/
Status – https://status.im/

Feel free to contact me:  [email protected]

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About John Potter

Copy Manager for XTRABYTES' Marketing Department since October 2017 (and XBY hodler since June 2017). John's earned degrees include an MBA, MA , and MLIS. Connect with him on Twitter or LinkedIn via [email protected]