Topic: ICO vs crowdfunding - page 2. (Read 2546 times)

ICO is different from crowdfunding or IPO.

Crowdfunding or IPOs are regulated by most countries which impose restrictions on who is allowed to fund or how much they are allowed to contribute.
ICO is unregulated. It was born to bypass the regulations. People can invest as much as they want. Everyone can raise money by issuing cryptocurrency. There is no need to have developed products. The only you need is ideas. And you can raise more money than Crowdfunding. Investors  often don’t have any right to the company. So there is no protection. It is often considered as a crowdsales (their products are coins. So for tax purpose, they will be taxed, proceeds from IPO are not taxed).

In my opinion, most of ICOs are scams. Their projects will die eventually (although there are many promising projects out there)

The main difference between crowdfunding platforms such as IndieGoGo / Kickstarter and ICOs is that ICOs are offering part of the profits (in one way or another), while IndieGoGo / Kickstarter campaigns are more of a way to provide earlier, cheaper access to promising new products. ICOs try to raise money by issuing tokens that are in most cases akin to securities while IndieGoGo / Kickstarter campaigns try to raise money be doing pre-sales of their product.

In short, ICOs are a crowdfunded mixture of venture capital and IPOs, which is also why the SEC and China got involved.

Initial Coin Offering (ICO) is almost similar to crowdfunding...I think the big difference is that when we are talking about ICO we mostly linked it to projects in the cryptocurrency sphere while crowdfunding can be any project that is looking for source of capital usually coming from small investors. There had been many crowdfunding platforms that became famous like IndieGoGo...I think those are actually predecessor of the ICO platform (though some may not agree with me on this comparison).

It would seem ICOs are specifically referring to crypto currencies or tokens offered in exchange for crowdfunding, while crowdfunding in itself is just raising money with a crowd. there has ben crowdfunding for a while now; observe gofundme and indygogo. but they werent offering a token or coin, essentially a security, with an expectation of profit. why else would anyone invest in these? i love some of these ideas, but i would never just "donate' money. if its a company, i would invest by buying shares. these icos are essentially issuing stocks in the majority of cases; of course this was going to be regulated eventually. the laws for legitimate securities are draconian.

welcome to the board stay a while, its fun here.

I quite agree that they are different but the issue if China not regulating crowd funding does not mean they  won't because looking at the report lay emphasis more on companies coming first time for funds and that's what ICOs is all about compared to crowd funding which is about existing business and more common for gambling sites. Maybe when that alone is starting to being exploited, then regulation is possible.

In view of the initial coin bargains super fruitful (ICO) from organizations including Iconomy, DTV Singular, First Blood and Decent, it is very certain that the group bolsters crowdsale cryptocurrency token of new companies based private Blockchain.

Notwithstanding, the whole system presale on cryptocurrency has pulled in feedback from specialists, which raises a great deal of persuading contentions against the authenticity of the ICO.

Every startup Blockchain can participate in ICO, even with some code scraps or shallow depiction of their administrations. The straightforward thought behind crowdfunding no product or framework has turned into a pattern in the business cryptographic money, with privately owned businesses/private segment to raise a huge number of dollars to fund their operations.

Thank you all! This is great insight. Much better than the info I get from the news.

You're correct in that it is unrelated (or at least only indirectly related). Crowdfunding and offering securities has nothing inherently to do with cryptocurrency.

Here's the thing: the ICO "bubble" has been front-and-center this year. People need to buy ETH (and in some cases BTC) in order to participate in ICOs. Furthermore, much of the funds raised are then held in cryptocurrencies rather than fiat currencies, which helps to drive the price of BTC and ETH upwards.

So, from a fundamental perspective, if you believe that ICO investment was driving BTC and ETH investment, then this throws a wrench into that process.

Simply, ICOs allow "investing" and "crowdfunding" without having
to report personal identification or going through legal compliance
systems like KYC/AML, and you are provided a token as a proof of
purchase, thus it is an "illegal security" asset.

When a legally regulated company uses ICOs in order to get capital,
it will only occur for three reasons: (1) that company is stupid and
their CEOs and lawyers have advised them improperly, or (2) that
company is a scam that will eventually run away with the money,
or (3) that company is a front to help launder either ill gotten
cryptocurrencies or dirty money, which will likely also scam
and disappear one day.

In most countries, an ICO token would be interpreted to be a
"security". Any altcoin, can transform into an ICO, when it is
created or directly associated with a legal organization and its
funding (and the corps business is not the token or the chain).
Companies are not allowed to create "securities" without the
oversight and approval by their government's financial
regulators. This is very well known and people who
are shocked by this action (in China now, and the future
actions that are to come in other places) shows blatant
ignorance of the law and how it functions. ICOs are not
the same as Bitcoin and can not function as such.

In theory, there is no valid purpose for ICOs except for legally
regulated companies to violate the law, which is clearly asinine.
A regulated ICO is an oxymoron and in practice is impossible to
guarantee full compliance. So, it is simpler to make ICOs illegal
for businesses, than to attempt to regulate them, since they by
design, facilitate no other function than noncompliance.

IMO, ICOs are only beneficial for the funding and creation of
illegal markets or illegal software. Of course, when this occurs,
majority of those project will be scams as well, but at least
those ICOs are not legal oxymorons like today's version.

Edit: typos

Thanks for the reply! Your explanation makes more sense than the articles I read on the subject.

It seems unrelated because it most likely is. To be honest, I don't think China's ICO statement was the cause of the current dip. It's only natural that a correction would occur after a new ATH, especially with a psychological barrier such as USD 5000,-. People always try to find an explanation after the fact and sometimes occurrences such as China's ICO statement simply seem to fit.

I have not posted here before, so maybe no one will reply, but I'm still trying to wrap my mind around why China's decision to ban ICO's had such a huge impact on the value of cryptocurrency in general. Seems unrelated in a sense...I am a huge believer in what bitcoin can offer...are ICO's undermining that effort?

Could someone explain to me how ICO's are different from crowdfunding? Why would it be regulated differently?