Even if most ICOs materialize on the Ethereum network, the first ICO, launched by Mastercoin in July 2013, unfolded on the Bitcoin network. Called Omni Layer at the time, Mastercoin managed to secure half a million dollars in ICO. It’s one of the oldest Layer 2 projects. Anyone could purchase tokens by sending Bitcoin to the address – for one Bitcoin, you received 100 Mastercoin, along with 10 Mastercoin per week.
Ethereum was funded via an ICO, which took place in 2014. The project raised $18.3 million back in the day, which was used for the development of Ethereum. Even if users could purchase tokens beginning in 2014, the blockchain didn’t go live until July 2015. The price of Ethereum during the period of sale was $0,31 according to ETH price chart. The 42-day presale for the Ethereum token was announced by its inventor in early 2014 at an unmissable blockchain conference in Miami.
Right now, ICOs are a popular way to raise funds, allowing companies to sell their own currency in exchange for investments. The process is much like running an IPO; the main difference is that everything is done online. Years since its launch, Ethereum is creating a new boom, opening up seemingly endless possibilities. ICOs shape not only Ethereum but also the wider crypto community. Please continue reading to discover why Ethereum is the platform of choice for ICOs.
What Is an ICO, And What Are the Benefits
ICO is an acronym, and it stands for Initial Coin Offering. When a company wants to raise money through an ICO, the project manager must determine how the coin will be structured. There are several possibilities, as follows:
- Static supply & static price
- Static supply & dynamic price
- Dynamic supply & static price
A cryptocurrency project starts with an idea and a document called a whitepaper. The aim of the whitepaper is to describe the project with the utmost clarity to get supporters on board, as their contributions are paramount for financing the project.
An ICO is a combination of crowdfunding and IPOs (Initial Public Offerings). It’s possible to raise capital without having to go through the strenuous, regulation-intensive process of a traditional IPO. If the money is less than the minimum amount required, the funds are returned to the project’s investors. Alternatively, if the fund requirements are met, the money is used to advance the company’s goals.
Anyone can launch an ICO, but you can’t jump into this world without knowing all the details. Launching a campaign may be easy, but it does take time. ICOs rely on smart contracts, essentially decentralized applications that streamline transactions on the blockchain. If you’re successful, the token you’ve created will increase in value, which means more benefits for investors. A website is necessary to ensure the cryptocurrency project moves forward; the site introduces the project to the public.
Most Companies Choose to Host Their ICOs on The Ethereum Network
ICOs have driven billions of dollars into the blockchain ecosystem, challenging traditional funding vehicles. The growth of small organizations is often impeded by internal financing, forcing entrepreneurs to identify different sources of capital. Even capital-intensive, high-technology firms have trouble competing and surviving in the marketplace. By taking advantage of blockchain technology, enterprises can fund their operations with an ICO, commonly referred to as a token sale.
Raising capital by selling digital tokens takes place primarily on the Ethereum network. The tokens often follow the ERC-20 standard, so each token is exactly the same in type and value. ERC-20 tokens have utility on the Ethereum blockchain and the decentralized apps they fund. Ethereum overtakes Bitcoin because it uses the Merkle Patricia tree, which saves storage space and speeds up search operations.
Ethereum’s smart contracts enable developers to create new tokens and platforms without much difficulty, not to mention they automatically calculate the amount of funds raised and distribute cryptocurrency once the sale is complete. Ethereum is the platform of choice because it has a great many use cases. However, there are alternatives out there, such as EOS, one of the latest blockchains to have entered the market. It’s commonly referred to as the Ethereum killer.
Ethereum’s Adoption Was Accelerated by The Popularity of ICOs
With the increased popularity of crowdfunding, ICOs have become the new rage in securing much-needed capital and funds. As a third party is no longer necessary when making contracts, smart contracts can automatically execute themselves on a trusted network, such as Ethereum. With an ICO, companies can reach a wider pool of potential investors, offering them the potential for high returns. The organization retains full control over the project, meaning it’s not subject to the whims of venture capitalists or other investors.
The volume of ICOs has increased rapidly, and while the idea of firm-specific tokens isn’t entirely new, the recent developments in blockchain technology and smart contracts have reduced the complexity of token issuance. It can be argued that Ethereum’s adoption has been accelerated by the popularity of ICOs. The adoption of Ethereum is uneven across businesses, industries, and countries. Institutionally, there’s growing interest in Ethereum for speculative, investment, store of value, and payment purposes.
The Ethereum network underwent a significant upgrade called the Merge, transitioning from a mining-based Proof-of-Work blockchain to a more energy-efficient, scalable Proof-of-Stake blockchain. It doesn’t come as a surprise that Ethereum enjoys widespread support and interest. The ICO boom may have passed, but ICOs continue to fund many success stories, and these disruptive innovations are possible owing to blockchain technology.
Some of the most important projects in decentralized finance were launched as part of the ICO boom. If you were one of those lucky investors, you were able to profit regardless of geographic location or citizenship. Of course, there’s no guarantee a company or a project will be successful, not to mention that the cryptocurrency market is highly volatile. The growth of token sales has led to the adoption of Ethereum, cementing its place in the cryptocurrency ecosystem. Despite some scalability issues, new projects are developed on the blockchain.