ICOs: The New IPOs?

by: Nicholas Kitonyi

The cryptocurrency market has utilized the power of the blockchain technology to disrupt financial markets.

Several startups have joined the market developing disruptive products that they have funded through ICOs.

Large companies are beginning to show an interest with plenty already looking to finance various development projects via ICOs.

While the cryptocurrency market has been criticized for lacking legitimacy, the emergence of top brands and large tech players in the ICO market could nullify this claim.

So, could ICOs go mainstream?

Now, when it comes to sourcing for funds from the public, there has been traditionally one popular avenue—going public via an initial public offering of common stock to interested investors. This has proved to be an effective way over the years, a practice that eventually created one of the largest marketplaces in the world, the stock market.

However, over the last few years, we have seen new methods crop up. Crowdfunding has been one of the most popular among startups that seek to disrupt unique markets. And while this form of financing was initially popular with disruptive SMBs, larger companies have recently joined the market. But just when everyone thought that things couldn’t get more interesting, the emergence of the cryptocurrency market started to stir things up.

So, Enter ICOs

Initial coin offerings (ICOs) are now the hottest products in startup funding. When they first entered the market, the perception was that they were going to disrupt the crowdfunding market because of the manner they are conducted. ICOs and crowdfunding are close peers separated mainly by history and the inspiration behind their creation.

Over the last few quarters, the cryptocurrency market has attracted notable heavyweights from the technology sector with some already having set up their ICOs while others have put plans in place. One good example, in this case, is Overstock.com (NASDAQ:OSTK) an internet retailer whose stock rallied more than 400% between July last year and January this year following its investment in Bitcoin.

And while the stock price has declined following the plunge of crypto prices, the company’s CEO has maintained its position on crypto. Overstock is slated to raise $250 million via an ICO to fund its new blockchain-based platform and cryptocurrency tZERO.

Other notable companies have also announced plans for an ICO including social messaging app Telegram, which announced the Telegram Open Network coin TON, and plans an ICO that could see it raise as much as $500 million.

Companies operating in the social networking space appear to be quickly adapting their services to blockchain technology. Following in Telegram’s footsteps is another giant social network Ask.FM which is built on a Q&A model. Established in 2010, Ask.FM commands a user-base of more than 215 million. Its rapid growth over the last few years has culminated in the company announcing an ICO for its new blockchain-based platform.

On the other hand, struggling camera and photography giant Kodak (NYSE:KODK) has announced an ICO for the proposed KodakCoin token and has already filed with the SEC to begin licensing arrangement with its blockchain partner, WENN digital.

Therefore, more big players are getting involved in crypto, which suggests that ICOs could potentially go mainstream in the future. This is giving the cryptocurrency market the type of legitimacy that traditional investors would want to see before they can consider investing in the crypto market.

And just like the IPOs, the concept of ICOs has contributed to the making of one of the most promising marketplaces in the modern era. The cryptocurrency market has thrived amid criticism from veteran traditional stock market investors and skeptics. Of course, there are more players out there that are staunch supporters of the crypto concept and they continue to drive growth in the market.

The crypto market success is driven by the unwavering desire of the millennials to invest in dynamic markets that promise to shape the future of investing. There are also baby boomers that have shown an interest in the modern methods of investing.

In other words, despite the obvious challenges the cryptocurrency market continues to face on the regulation front and a strong resistance from legendary mainstream stock investors, there are several other factions that believe in the idea behind crypto.

When announcing results for the first quarter of 2018, legendary investor and Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) chairman, Warren Buffett, maintained his strong negative stance on bitcoin while vice chairman of the company and close friend, Charlie Munger, likened trading bitcoin to making money off “freshly harvested baby brains”. So, it is correct to infer that aristocrats of the traditional models of investing may not be joining the crypto market any time soon and whether they are proved to be wrong in the long-run remains to be seen.


Crypto skeptics claim that the cryptocurrency market lacks legitimacy because most of the players are mainly startups and a few briefcase projects aimed at defrauding unsuspecting investors. However, this argument could be nullified sooner than most would expect as bigger players like Telegram, Ask.FM, Kodak and many more continue to join the ICO marketplace.

In summary, ICOs are becoming popular in the market and now, even bigger companies are getting involved. What once seemed to be a form of capital financing restricted only to startups and small businesses is now growing to status levels of the IPO market. It might not be mainstream yet, but the path is getting clearer with every big player that announces an ICO.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.