Peeping Into ICO
Posted By Neeraj Kumar | 26-Oct-2017
A startup company is funded if the Venture Capital firms see potential in its project, which, by far is just a prediction by the investor VC. But if any startup is funded by these venture capital firms is more likely tend to flow the control of their own idea to these venture capital firms. ICO may be the best way to stop the transfer of control of your own idea into the hands of an outsider venture capital firm, by raising cryptocurrency capital for the project.
ICO: Initial Coin Offering (ICO) is a means of crowdfunding for raising cryptocurrency-capital (like Bitcoin, Ethereum, etc.) for startup companies, in which a percentage of newly mined cryptocurrency or coin is sold to its early investors in exchange with already famous cryptocurrencies like Bitcoin or Ethereum etc. An ICO is a way to sell participation in an economy, giving its investors access to features of the project starting at later date. Coin offered in an ICO is a symbol of ownership interest in an enterprise—a digital stock certificate, if you will.
Initially, when the project (which has this cryptocurrency to be sell-through ICO) is just starting and needs investors, it’s cryptocurrency is not that popular and has a very weak mapping with other cryptocurrencies, such as Ethereum. Let’s say for example, in starting it can be like 1000 coins per
Nowadays, more and more silicon valley projects are fueled with ICOs.
Downsides: So now this ICO thing may seem all good to you, right? You may be nodding your head for yes, but slow down a
With the over-tokenization of projects, however, this can also be achieved by existing blockchains, people are blinded by fast-and-easy money for raising money quickly.
These tokens are virtual money kept on a server, so the security of this money is a big issue. In the U.S., a virtual organization DAO raised more than $100 million in a
CoinDash, an Israeli startup, has gone under ICO for its own digital tokens in exchange for the Ethereum. But just 13 minutes into the token sale, an “unknown perpetrator” hacked CoinDash’s website and changed the address for sending investments to a fake one, announced on the company website. That diverted millions of dollars in contributions to the attacker.
While the CoinDash ICO still managed to raise $6.4 million from early investors, the hacker stole $7 million worth of Ethereum before the company was forced to pull the plug on the token sale.
Despite the losses, CoinDash promised to dole out its tokens accordingly to everyone who participated in the ICO before it was shut down, whether or not they sent funds to the correct address.
Who knows, this can be an actual attack by some hacker of fraudulent