As token sales and the Initial Coin Offerings that create them continue to attract buyers what is the fuss all about. Well here are some reasons why token sales are soaring:
- Companies can bring in millions without having to do the typical lengthy fundraising roadshow so can focus exclusively on building the company and recruiting, rather than fundraising.
- Tokens often incentivises token owners (potential users) to contribute to the community, as they now have a vested interest in the network’s success. In this sense, tokens are a solution to many organisations chicken-and-egg problem.
- Token sales make a company sexy again… Holding an ICO is a great way to get media attention and make a company relevant and attractive to a whole new audience often in a completely differs geographic location.
- Tokens do not dilute existing shareholders nor do they increase the amount of debt a company has
- They offer companies a fantastic way to deepen and strengthen the relationship and interaction that they have with their clients,suppliers and staff in a way that share can not achieve and this is particularly important for brands.Interesting to see Burger Kings token launch.
- Tokens are helping to democratising Capitalism and encouraging people to “put their money where their mouth is” and get involved with business they believe in.This is seen by companies like www.humaniq.com that raised over $5.6million from 5,800 participants e.g. lots of people committing relatively small sums of capital.
- Huge investor appetite are now beginning too enter the market as over $2Billion have been raised in 2017 to date and the value of tokens exceeds $168Billion with Goldman Sachs saying that Token sales are now exceeding other types of capital raising for Blockchain and types of businesses.This will be further fuelled by announcements like this that you can hold a Crypto Currency in you pension plan.
However caveat emptor -Buyer beware.As one of the riskiest times in the life of a Token is when it is being launched at the ICO as well as the time when you can see substantial prise rises.There are very similar patterns emerging in 2017 compared to what was happening in 1997 and many of us remember what happened in the years of DOT COM boom and bust.YES there will be winners but like many start up companies, many will fail and unless you are able to devote the time and have the expertise it may be more prudent to participate in a fund that buys tokens and spreads your risks!!