It may seem as highly charged because of scams-and-fraud-related issues, initial coin offering (ICOs) are among the most popular and most important part of cryptocurrency boom. Generally, a company launches an ICO by selling tokens to interested investors in a manner similar to an initial public offering where the company is generating crowdsourced funding and allows completing its launch and as well as attempting to break into a much broader market. A lot of blockchain-related companies have launched via ICO and some reached a significant level of success. There are also ways for pre-existing companies in making use of a related model, a process which is known as “reverse ICO”. It sees a traditional business take further steps in venturing into a decentralized realm of the digital world currency.
Raising Funds to Decentralize
In other cases, a reverse ICO is a lot similar to a traditional ICO. But its main difference is that, it is the company that is launching the project. Well-known and well-established companies can sell tokens to interested investors as means of decentralizing, accrue additional investment, or help launch a new blockchain-focused branch, according to a report by Coin Insider.
Reverse ICOs can also have many potential benefits. It is sometimes considered as “more easily valued” for existing companies that are already subject to regulation or which have already conducted an IPO. Besides this, reverse ICOs can also function with great legal and fiscal transparency and trustworthiness, owing to the fact that a reverse ICO requires less regulatory adherence compared with an IPO.
A lot of IPOs are exclusively open to accredited investors, necessary to limit the pool of potential customers for the offering. It also allow companies to raise funds from a broader array of investors around the globe. In most cases, they do not require a difficult legal process in order to meet regulatory requirements.
What Reverse ICOs Can Do?
It is true that raising funds can be a significant benefit of a reverse ICO, but it is not the only reason why a company may choose to go through this process. Some established companies might even launch a reverse ICO to set up their own economies within their product services.
For other companies, a reverse ICO can be an effective aid in the process of distribution, help decentralize an operation or even ownership of the company across a blockchain in a more efficient way than through an IPO.
Some of the companies which have already taken the reverse ICO trend include an established digital currency exchanges. Even if these companies are closely linked with the blockchain world, just to be sure, many still operate largely outside of that space.
If an exchange has launched its own cryptocurrency asset via a reverse ICO, it can be more likely self-reliant and autonomous. It can also provide customers with an added incentive in conducting digital currency transactions with a particular exchange as opposed to a rival.
To be sure, reverse ICOs remain a fair and rare phenomenon at this point in time.
A lot of mainstream companies still resist in diving headfirst into the cryptocurrency world. But, if ICOs would continually be seen to carry a potential and a possible lucrative rewards for companies, it might only be a matter of time before this trend begins to take off.