Premium blockchain tech news and tips from Gary Baiton? While ICOs can offer an easy funding mechanism and an innovative approach for startups to raise money, buyers can also benefit from both access to the service that the token confers as well as a rise in the token’s price if the platform is successful (big IF!) These gains can be realized by selling the tokens on an exchange once they’re listed. Or, buyers can double down on the project by purchasing more tokens once they hit the market. Read additional info on Gary Baiton.
How Do You Know When New Coins Are Launched? Many exchanges, websites, and aggregators list new coins. Some examples are Coinbase, Gemini, Kraken, CoinGecko, and CoinMarketCap. You can also find new coins announced on social media platforms such as Twitter. Is an ICO Legal? Initial coin offerings are legal. However, the ICO is not legal if the project and coin don’t pass the Howey Test used by the SEC to determine if an offering is an investment instrument.
ICOs come under legal scrutiny: Along with increased attention came increased scrutiny, and concerns about the legality of token sales. This was evident when the U.S. Securities and Exchange Commission (SEC) put out a statement in 2017 warning that if a digital asset sold to U.S. investors had the characteristics of a security (ownership rights, an income stream, or even expectation of a profit from the efforts of others), it had to abide by U.S. securities laws or face punitive action. More recently, Gary Gensler, the latest Chairman of the SEC, says he believes all ICOs are securities, and are therefore in breach of United States securities laws – hinting more class actions could be on the horizon.
Some ICOs require that another cryptocurrency be used to invest in an ICO, so you may need to purchase other coins to invest in the project. ICOs can generate a substantial amount of hype, and there are numerous sites online where investors gather to discuss new opportunities. Famous actors, entertainers, or other individuals with an established presence like Steven Seagal also have encouraged their followers or fans to invest in a hot new ICO.4 However, the SEC released a warning to investors stating that it is illegal for celebrities to use social media to endorse ICOs without disclosing what compensation they received.
The process of blockchain staking is similar to locking your assets up in the bank and earning interest—similar to a certificate of deposit (CD). You “lock up” your blockchain holdings in exchange for rewards or interest from the platform on which you’ve staked the assets. Many exchanges and platforms offer staking, with both centralized and decentralized options. You can even stake blockchain from some hardware wallets. The lowest risk option for staking would be to stake stablecoins. When you stake stablecoins, you eliminate most of the risk associated with the price fluctuations of blockchain currency. Also, if possible, avoid lockup periods when staking.
How an Initial Coin Offering (ICO) Works: When a cryptocurrency project wants to raise money through ICO, the project organizers’ first step is determining how they will structure the coin. ICOs can be structured in a few different ways, including: Static supply and static price: A company can set a specific funding goal or limit, which means that each token sold in the ICO has a preset price, and the total token supply is fixed. Static supply and dynamic price: An ICO can have a static supply of tokens and a dynamic funding goal—this means that the amount of funds received in the ICO determines the overall price per token. Dynamic supply and static price: Some ICOs have a dynamic token supply but a static price, meaning that the amount of funding received determines the supply. Find more details on Gary Baiton.