Submitted by Micah Smith on Mon, 01/15/2018 - 12:32
China says No to ICO’s
China says No to ICO’s

ICO’s (initial coin offerings) are really hot right now, practically sizzling, with people literally raising millions overnight in crypto currency. Last year ICO’s raised a total of $1.6 billion.

Yet a lot of these decentralized and disruptive fundraisers are turning out to be little more than elaborate scams. Some experts are suggesting that up to 75% of all ICO’s are a complete fraud.

Why are ICO’s so risky? 

Unlike traditional IPO's where buyers gain shares, during an ICO, each company is given a virtual token (its own form of cryptocurrency). The token goes up in value only if the company proves viable, then it becomes liquid again.

Not only do the companies often not prove viable, hackers can influence the outcome of the market. You would think that these companies that depend on cryptocurrencies would have kept better tabs on their cyber security.

Well, turns out everyone makes mistakes. In the last huge ransomware attack Ethereum was hacked into and suffered huge damages, due to, don't laugh, weak passwords.

There are often comments and articles written web-wide alluding to the ICO fundraising and all the frauds. It seems like this blockchain technology craze is bringing in the masses.  However, many powerful groups and Nations are taking a firm stand against ICO's with varying success and different implementation policies.

China flexing muscles against ICO's

Recent Anti- ICO rhetoric comes from the brains controlling the minds and pockets of billions, the People's Bank of China, who have completely banned ICO’s from the mainland. In China alone there were 43 ICO platforms able to raise 2.6 billion yuan or $398 million.

They also ordered any past firms that steered ICO’s to return all their money raised back to their investors. The bank has claimed that these actions are fraudulent and funds are supporting numerous illegal activities.

As you might expect the value of Bitcoin reacted to this and went down 11.4%, Ether tumbled 16%. Nevertheless, it’s been difficult for China to exert lasting influence over ICO’s because they seem to quickly spin out of IT control, growing beyond the rates that the banking system is able to handle.

It is unclear whether ICO’s will get any safer in the near future, but is certain is that they are not going away any time soon.

Many experts consider this the disruptive technology of the future is here to stay and governments will eventually get used to it. Although, a report from the Chinese financial news outlet Yicai has indicated the opposite, with rumors of more regulatory action from the Chinese government to follow.

At the same time, the US securities commission issued a statement concerning ICO’s and the risks involved. Unlike China, The U.S. has acted with caution against banning them. The Bank of Russia issues a similar statement, along with officials from Canada, Singapore, and Hong Kong.

The best news is yet to come - when Estonia launches its own cryptocurrency.

Stay tuned and keep your eyes and ears peeled for ICO updates!