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Understanding What an ICO Is And Why Government Wants to Regulate It

Sep 18, 2017 at 12:47 // News

It would appear that on planet crypto, ICOs are currently the flavor of the month, perhaps also of the season. With each passing day, a new ICO is announced and they have now become ubiquitous across all forms of media. Coinidol writers, for example, receive information on at least one new ICO every day.

With so much variety to choose from, any investor would be right to ask how to go about picking a viable ICO, and avoid falling into the hands of the scammers who litter the crypto landscape. So how does one know which ICO to invest in? Before we can answer that question, we would benefit by understanding what ICOs are.

ICOs Defined

ICO stands for Initial Coin Offering. If you understand the concept of an IPO or Initial Public Offering, then it would not be too hard to understand what an ICO is. In an IPO, an investor purchases shares or stock that represent fractional ownership in a corporation. Investors in an IPO do so hoping that the value of their shares would eventually appreciate. The same applies to investors in a cryptocurrency unit, or coin.

The point of departure is in the fact that ICOs are coupons based on the blockchain. They are also, at present, unregulated in many jurisdictions. Some ICOs are based on the public blockchain while others issue from a private, and in many cases, permissioned blockchain. An issuer of an ICO will often publish a white paper, which serves as a prospectus on why investors should participate in his token sale. To date, ICOs have been able to soak up $1 billion in investment. Half of that money has been shelled out in 2017 alone.

At the present time, no regulator in the West has announced any plans to regulate ICOs as a separate category. At best, many regulators have been issuing warnings and app...

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