Is the reverse ICO the next big thing in crypto funding?

23 Jun, 2018
by Arthur Sillers
News
Is the reverse ICO the next big thing in crypto funding?

Jeremy Epstein, a figure in marketing and venture capital fields, has offered analysis via Venturebeat of an upcoming boom in 'reverse ICOs.'

ICOs have been a popular, high risk, and often extremely lucrative method of developing initial capital for crypto startups. ICOs generally entail investors buying into an initial cryptocurrency in exchange for a share of coins, essentially trading on the future appreciation of the cryptocurrency.

Epstein points out that this process can essentially be used in reverse, with companies who are already producing revenue to tokenize existing platforms. One important such reverse ICO is Kik's upcoming Kin token, which Kik is introducing in the next few quarters.

Epstein predicts that these reverse ICOs will be utilized prodigiously to decentralize platforms centered around sharing content, like Soundcloud and Twitter, who will be able to use them to compensate users who create value for their platforms.

In South Korea, as reported in Cointelegraph, reverse ICOs are a common way for established companies to go public. By offering the public the chance to purchase equity in the company in the form of token sales, industrial ventures and other companies have been taking advantage of the economic benefits of cryptocurrencies in a country where 30% of the population is invested in cryptocurrency in some capacity.

In fact, according to news outlet Cicision, South Korean blockchain company BOScoin has announced a 'Reverse ICO Partner Program,' which will seek to allow companies preparing to undergo a reverse ICO the use of BOScoin's technologies.


South Korea's enthusiasm for the reverse ICO shows that cryptocurrency is a viable alternative to stocks in making a company public, and Kik's eminent tokenization shows the benefits that the reverse ICO can have for social platforms in particular. If Epstein is correct, reverse ICOs could be a large part of the way that blockchain technology is used by traditional commercial ventures in the future.

One important consideration is that because reverse ICOs tokenize already existing revenue, they don't introduce the same level of risk that traditional ICOs do. Chepicap has noted some doubts that investors have been voicing about the pace and scale of ICOs growth, and some have began pointing to the reverse ICO as an alternative. 

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