ICO: is the abbreviation of Initial Coin Offering als named CrowdSales or Token Sales. It means that projectowner (mostly blockchain projects) offer to the crowd some units of a new cryptocurrency or crypto-token in exchange against other cryptocurrencies like Bitcoin or Ethereum.
Ethereum – The ICO Crowdfunding Machine: One of the easiest application of Ethereum’s smart contract system is to create a simple token which can be transacted on the Ethereum blockchain instead of Ether. This kind of contract was standardized with ERC#20. It made Ethereum host of a wide scope of Token Sales.
The concept of funding projects with a token on Ethereum became the blueprint for a new and highly successful generation of crowdfunding projects.
Examples for successful ICOs on Ethereum are:
- Singular DTV
- First Blood
- Digix DAO.
There are dozens of ICO every month which explore new and creative ways to leverage smart contracts to add more features to these tokens. The potential of this trend is immense. ICO enables every individual and every company to easily release freely tradable tokens to raise funds. It could be used to completely reconstruct the financial system of shares, securities and so on. It decentralized not just money, but stock creation and trade.
Tokens for open platforms:
Open platforms have proved difficult to create because it has been historically difficult to monetize them even if they become successful—by nature they are public goods. Now, however, the developers of a cloud storage service can incorporate a scarce access-token, an appcoin, into the design, distribute that token to users, retain some amount of the token for themselves, and if the platform proves popular, the token (alongside the holdings of the developers) will grow in value and remunerate the developers for providing a public good. This new model challenges the concept of equity as traditionally understood, and carries entirely different risks and rewards.
Protocol Tokens (PTs) = Digital tokens that are governed by a coded protocol. The rules of the protocol are enforced by the underlying blockchain technology. They are generally not linked to any “centralised” entity or any “traditional” real-world assets
Traditional Asset Tokens (TAT) Digital tokens that represent a “traditional” asset, such as fiat currency (ERC20 GBP on Ethereum, Decentralised Capital’s ERC20 Euro) or precious metals (ERC20). These assets are still dependent on traditional financial and legal systems.
Ripple: Ripple Labs created 100 billion XRP-token which serve as an anti-spam mechanism in the payment network Ripple, as you have to pay your network fees in XRP. The XRP are sold by Ripple Labs.
Next: Next: the 1 billion token were sold to early investors. With the ICO the developers only got a double digits amount of Bitcoins. Today the NXT token, however, are worth much more and Next has become a relatively successful and stable cryptocurrency.
Mastercoin: In 2013 Mastercoin announced to build a layer on top of Bitcoin and sold the Mastercoin-token to investors. The developers received around 10,000 Bitcoin, which have been worth $1mio at this time. Mastercoin token gained value some month later; some investors made huge profits. Later Mastercoin merged with Counterparty and Omni.
Ethereum: The largest ICO by now was made by Ethereum. With a presale of around 60mio ETH, the Ethereum Foundation raised around 31,500 Bitcoin. This event has become one of the biggest crowdfunding ever and the start of a wildly successful cryptocurrency. The investors of the ETH-presale profited massively.