One of the world’s cryptocurrency is always changing and one of the latest trends is Reverse ICO – the way to an existing business has the ability using the blockchain technology and in fact is very interesting to raise money through token offerings. But what is actually a Reverse ICO, and what before can be a traditional ICO? Let’s dive into this new course in funding and its consequences for investors.
An ICO is a way of raising funds by an established business that issues digital tokens for expanding their business into the blockchain. Where an ICO differs from the traditional path, is when instead of blockchain startups seeking funding from investors to build projects- Reverse ICOs originate from businesses that have an existing customer base, revenue model, and established market presence.
– Existing Market Presence: Reverse ICOs are made by companies that already present the track document, whereas traditional ICOs is initiated by start up businesses with nil or little past enterprise historical past.
– Less Risk for Investors: Because Reverse ICO involves already running businesses, it’s less of a risk as compared to traditional ICO which are mostly unstableness in finance.
– Regulatory Compliance: Companies that are licensed and established that perform Reverse ICO is more likely to comply with regulatory requirements and thus reduce the risk of losing the money because they fraudulently sold tokens.
Businesses choose Reverse ICO for a number of strategic causes:
– Going Deep Into Blockchain: Many businesses aim to incorporate the blockchain technology in their business model, provide tokenized services and decentralized applications.
– Raising Another Cash: Reverse ICOs give businesses new way to financing that go beyond traditional venture capital or IPOs.
– Improving Customer Interactions: By giving tokens, businesses can generate loyalty schemes, induce consumers, and get greater engagement inside its surroundings.
– Worldwide Access: Unlike traditional fund raising methods that usually have a geographical limitation the Reverse ICOs permit worldwide investors to join and at the same time increasing the liquidity and markets’ visibility.
– Worked Business Model: Investors receive return of investment due to the fact that the company related with the Reverse ICO have already has the right business structure.
– More Transparency: Because these businesses have already gotten underway, they usually picture better documentation, financial information, and management roadmaps.
– Regulatory Protection: It is more possible that reverse ICOs conform to the laws and regulations imposed by the financial services, reducing the risks of fraud and scams.
– Market Challenges in Adaptation: There is no guarantee that every company succeeds in integration of blockchain in its existing business model, this may cause failures.
– Regulatory Pressure: Agencies may have to tighten up regulations for tokenized businesses, limiting their capacity to function successfully.
– Token Utility Problems: The prosperity of a Reverse ICO relies upon whether the given out token offers genuine world utility along with demand inside of the company’s community.
Many established firms have successfully performed Reverse ICOs and showed the potentiality of Reverse ICO:
– Telegram (TON): The messaging platform issued Telegram Open Network (TON) and collected billions through token sale.
– Kodak (KodakCoin): A photography-led company, Kodak, has launched KodakCoin which is a blockchain-based platform that equips its users with a place to manage digital image rights and other transactions.
– LINE (LINK Token): Popular messenger LINE released LINK – token for making transactions within its own blockchain – based services.
Before acquiring a Reverse ICO, take into consideration the following factors:
Reverse ICOs provide a unique chance for well-established companies to enter into the blockchain world as an alternative to investors who seek to support such brands. However, like any investment, it will only be successful if you do your homework and do your research and your due diligence to handle the risks and make the best of the potential returns. As the cryptocurrency sector advances, Reverse ICOs may soon become the norm for companies wanting to go through tokenization of their operations and at present an international financier base.
Disclaimer: Crypto investments are high-risk and not for everyone. Do your research and seek advice before investing. DecryptoX complies with laws but operates in evolving DeFi regulations.
