ICO 101: What Is An ICO? (And Why Elitium Chose Not To Do One)

Let’s start with a definition. 

An Initial Coin Offering (ICO) is a way for new cryptocurrencies to raise money to fund platform development.

Suppose everyday investors believe in the concept of a new app. They can invest in the said app and receive cryptocurrency in return, hoping to profit if the digital token subsequently appreciates in value.

The token might be appreciated if it has some utility in the product or service offered, and that product or service becomes popular. But if a token doesn’t have utility, the only reason it could go up is if it represents a legal stake in the company.

But that’s where the problem lies.

The Problem With ICOs

ICOs are, for the most part, unregulated. 

They became immensely popular in 2017 when cryptocurrencies hit mainstream media for the first time. 

However, it quickly became apparent that investors didn’t really know what they were buying when investing in ICOs, which is why the authorities clamped down. Many investors believed that they were purchasing a legal stake in a company and so had rights to future profits, dividends, or otherwise. 

In reality, owing to the lack of regulation, there were no rights associated with anything — and while some ICOs may have yielded massive returns for the lucky few, many new tokens at best disappeared without a trace.

At worst, they turned out to be little more than genuine fraud.

Why Elitium Kept An ICO At Arm’s Length

In truth, ICOs are little more than a marketing gimmick. A blockbuster raise is just a hype-machine for tokens, allowing founders and early investors to cash out for a profit while loyal followers are left scratching their heads.

And because an ICO doesn’t compel companies to build a product, many investors never even get to see their funds materialize as an actual product. Contrast this with Elitium: we’ve prioritized development over unmerited hype.

We know that in focusing on creating value, building an actual company with actual products that deliver an outstanding user experience, we’ll have no trouble generating hype at the appropriate moment.

We’re building a company that can survive for 10, 50, 100 years: a sustainable operation that prizes long-term success over short-term profits. We hope you agree it’s the right way forward.

If you do, why not create an account, then check out our products for yourself.