A History of Blockchain Fundraising Methods

Blockchain-based fundraising has been a tremendous success, with billions of dollars in funding raised across thousands of projects. The decentralized nature of these fundraising campaigns has led many in the traditional VC community to question their utility and viability long-term. What if this new way of raising capital leads to misaligned incentives? The concern is that blockchains like Ethereum were not designed with investor protection in mind. In response to these naysayers, business leaders note that “what the ICO markets are showing is that the world has incredible demand for future-looking projects.” In short, blockchain is revolutionizing fundraising. Since the early days, there have been a number of different fundraising methods, including the ICO, the IEO, the IDO, and now the ITO. Let’s dive into each of these in detail. What Is An ICO? Initial Coin Offerings (ICOs) are a method of crowdfunding using cryptocurrencies as the currency. They work similarly to an IPO (Initial Public Offering), except buyers purchase tokens instead of shares of stock. Ethereum is considered the first well-known ICO, with its 2014 token sale raising 3,700 BTC in its first 12 hours, or roughly $2.3 million at the time, though that amount of Bitcoin is worth over $165 million as of writing. Once purchased, users are often given access to the product once it launches; however, early buyers may stand to make more money than those who buy ...