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Initial Coin Offering and Definitions

In this article, Founder of Blockchain Law Lab and Founding Partner of Gurcan Partners,  Att. Bedrettin Gürcan will mention about Initial Coin Offering (ICO).

This article is just a short part of the Academic Research of the Att. Bedrettin Gürcan on the topic of The Legal Framework of the Cryptocurrencies and ICOs. It is one of the most detailed law guides on the topic. To download all study including a wide aspect of regulations from all over the world, please click here.

Initial coin offering is a fundraising style of blockchain project by offering tokens before the system started to work. Initial coin offering can be considered as a seed investment of blockchain project. But the biggest difference between ICO and seed investment is sharing company.

In seed investment, investors as venture capitals or angel investors invest capital in the company or just idea and incorporate a new company or take share from an existing company. However, in the initial coin offering, there is no share taken by investors. Investors of ICOs just take the private cryptographic key to access their tokens. Most of the ICOs do not enable to sell these tokens until the project completed and launched.

To start ICOs, founders mostly prepare an information paper, called white paper that describes to the technology behind the token they would like to sell with ICO. There are advantages of this tokens from the competitors besides the uniqueness of this idea.

ICOs mostly accepts other cryptocurrencies like Bitcoin, Ether etc. and some of them also accept fiat currencies like US Dollar. There are several sectors ICOs are so popular as trading-investing, finance, payments, infrastructure, social network. But the biggest three sectors were funded by ICO are finance, retail/commerce, and payments/wallets. (The source: ICO Statistics – By Industry)

In 2017, over 500 initial coin offering projects raised $6.5 billion during a time when overall crypto markets grew in size, awareness, and depth.  (Token Sales in Review: Part I-, 2018)

Some of the most successful two ICOs I 2017 targeted at next-generation blockchain infrastructure, like Filecoin (Raised $ 217.000,000 in 2017), Tezos (Raised $232,000,000 in 2017). Most successful ICO of 2018 by now is Telegram, which is a messaging app. (Raised $850.000.000)

Creating ICO is not so hard by means of abstract of ERC20 Token Standart, which is a technology of Ethereum. Some ICOs showed extraordinary performance about time and amount of money. For example, Aragon ICO raised around $25 million in just 15 minutes, media-digital advertising project Basic Attention Token’s ICO raised $35 million in only 30 seconds, and message and payment app, Status.im raised $270 million in a few hours.

Year by year, these illustrate shows some of the most successful ICOs.

The amount of money, collected by ICOs already reached more than $5 Billion, which is quite a high amount for one of the financial instrument before regulated.

Blockchain Law Lab is a parent company of International Law Firm Gurcan Partners.

Our international team and network are ready to help you with all legal issues related to cryptocurrency, Blockchain, and ICOs. You can have a check our professional team from here. 

Please do not hesitate to contact us regarding Initial Coin Offering regulations or any other issues regarding cryptocurrency.

This article is just a short part of the Academic Research of the Att. Bedrettin Gürcan on the topic of The Legal Framework of the Cryptocurrencies and ICOs. It is one of the most detailed law guides on the topic. To download all study including a wide aspect of regulations from all over the world, please click here.