ICOs- The Good, The Bad and the Bubbly.

With $4 billion raised in 2017, ICOs have been getting a lot of attention. The tabloid press has been full of stories of get rich quick schemes and Instagram celebs endorsing this ICO and that. Cable TV has been full of analogue talking heads adding their soundbites about tulips and bubbles.

So, are ICOs part of a digital gold rush that will leave behind a ghost town investor landscape? Or, as many more reflective voices are now saying, are ICOs a revolutionary, disruptive method of financing that will bring huge advantages to investors, innovators and society? As the co-founder of an equity crowdfunding platform, built on blockchain, here are my thoughts.

The Good:

Financing: If you’ve got a great idea and a team of people commited to that idea you can create a token and get investment quickly. Startups can raise funds through issuing tokens without giving away equity, allowing the founders to maintain complete directional control over the business. Another advantage is that the company isn’t chasing short term quarterly shareholder returns and can concentrate on the long term value goals of the business.

Trust: With blockchain technology and crypto based tokens, an organization can incentivize collective action. That could be for social good projects or commercial ventures. The point is that trust is wired into the system by the rules/ protocols that are embedded into the smart contracts that dictate the use of the tokens.

Returns: Bitcoin was was able to build a decentralized platform by incentivizing people to donate time and effort in exchange for coins that were worth a couple of pizzas. The biggest holders of bitcoin in 2018 could probably now buy Papa Johns. Being a part of the future of finance can be as simple as being a part of the crowd.

The Bad:

A radical new way of raising huge sums of money has, unsurprisingly, led to a few scams. The vast majority of ICOs will back startups that fail. Caveat Emptor has been around a long time for good reason.

The Bubbly:

Asset bubbles in tech, property and- yawn- tulips have been around forever. However, as I outlined in this article, bubbles give rise to innovations and game changing businesses.

Conclusion:

Money markets and madness go together like a horse and carriage. However, the crypto craze and ICO hype of 2017, from the history of previous technology driven bubbles, can be seen as the start of a disruption that will eventually bring huge benefits to societies and some early investors.

About the Author: Elliot La Cour is a co-founder of Crowd-Up, a startup that plans to change the way equity crowdfunding works by using the power of blockchain technology.

ICOs- The Good, The Bad and the Bubbly. was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.