PHILIPP PIEPER, CO-FOUNDER SWARM FUND, EXPLAINS WHAT IS ICO, AND REASONS OF THE ICO RUSH GLOBALLY, AND THE RISKS IT BRINGS TO INVESTORS
Anything similar to an IPO
First of all, I would not call it ICO, but rather a token offering. In my view the acronym is misleading to assume that it is anything similar to an IPO. Rather than shares, token offerings are ways the user community is able to buy into a utility that is inherently part of the underlying product or network. Rather purchasing tokens means that the users are have ways to secure “rebates” on the future service. Tokens can have appreciation or speculative value when the adoption of the service increases, the tokens are necessary for the service’s usage and the token supply is limited.
A new way of community funding
Certainly there are different motivations of players rushing to do ICOs and – let’s also face it – of crypto investors to participate in these token offerings. Underlying all, this is a new wave of apps that are built, operated and used by communities. And tokens are a brilliant way to align the interests and exchange amongst the network participants. This basis allows a new way of community funding, that brings together the users that want a service to exist and find ways how to help get it created. That is revolutionary and introduces a new way of thinking how to build and ramp services with community DNA by design. That said, with the latest rush, not every ICO necessarily fulfills best buy for levitra that promise and time will tell which of these justify their value. But as we are so early in this market, it’s not surprising that a lot of practices still have to find their way and we are discovering things that work and don’t work almost on a daily basis.
Beyond the speculative bubble
We are all together learning at the moment. Beyond the speculative bubble, we need to come to a fundamental understanding what constitutes value and what are things to keep an eye out for – positive as well as negative. We can certainly apply a lot of equivalent considerations that are well understood in the investment landscape, like what is the quality of the teams, the value proposition of the offering, the go-to-market, market size, etc. But we still have to find our way to understand how the community DNA translates into adoption and good product. We’ve seen great examples, but still time will need to tell.
No proper ICO infrastructure
I wouldn’t even speak of a proper ICO infrastructure at this point. From what I’ve seen there are individual players that have been affiliated with ICOs and that have started to replicate the first process onto other ones. I would still not say that there is a blueprint of good practice yet. Every single ICO had one flaw or the another that have been criticised.
Philipp Pieper – Serial Tech Entrepreneur & Angel Investor. Currently builder of start-ups at the intersection of blockchain & data, advising various early and late stage companies.
