Are Initial Coin Offerings the Brave New World or Hello, Wild West? With the token economy estimated to be around $4 billion, companies like Kik are investing a whole lot to see which world lies ahead
In simple terms, an Initial Coin Offering (ICO) is when companies create their own digital currencies and sell them to users who can either redeem them later for services or sell them on a coin exchange at a later date. (TechCrunch). The successful Canadian start-up Kik, a messaging app with 15 million users per month and valued at $1 billion, has created its own cryptocurrency, the Kin, and these tokens can be traded for goods and services, and more importantly, for cash, as well. There are many compelling reasons behind choosing an ICO and one of them is cutting out a whole bunch of middlemen. According to Padraig Walsh of Bird & Bird, “An ICO sidesteps the typical business model development — raise money, build product, build business model, drive to liquidity with angels, venture investors, advisers and bankers along the way. Instead, in its purest form, projects funded by an ICO represent funding by users in proportion to their usage, and rewards early adopters, network operators and developers.�