Initial Coin Offerings: What does the future hold for the crypto-economy?

Nitin Upadhyay

The technological innovation triggered the
commercialisation of the Internet. In the late 1990s, digital currencies and
tokens in the form of loyalty points have flourished the Internet. People could
earn rewards over the e-commerce platform for buying and selling of goods and
services. In the World of Warcraft gaming system, the digital currency – “gold”
was used. During the pre-blockchain era, various micropayments, payment, and
currency systems proliferated, for example, eCash, e-Gold and PayPal, which
also got affected by the technical, ethical and legal sphere. The advent of
another technological innovation, Blockchain, resulted in the widespread usage
and proliferation of virtual currencies and payment systems but without the
involvement of intermediaries or third parties. In the era of the Blockchain,
the firms are rushing for the initial coin offering (ICO). The ICO, otherwise
called a token sale or token launch, enables a firm to build an ecosystem of
the stakeholders where the stakeholder gets the benefit of the firm’s new
product utility. The stakeholder can participate early in the development and
utilization of the product. The tokens help the firms to develop, build, and
deploy their product for the established user base as part of the ecosystem.

Usually, a coin and a token are used interchangeably, but
in the context of business and the technological sphere, both have different
meanings. Coins can be classified as – a native coin (crypto-currency), an
infrastructure coin and a token. In the Blockchain, a coin is a native unit
value which is used as a mean of exchange within the blockchain network and
also to incentivise the network participants to use it. Beyond exchanging
value, the native coin has limited functionality. Some popular native coins are
Bitcoin, Ether, Ripple and Litecoin. The Ethereum’s native coin, Ether, also
referred to as an infrastructure coin, is used within the network…

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