ICO vs ico

Filecoin just completed their almost month-long ICO yesterday and raised a total of $257 million, including $52 mio from prominent VC firms Union Square Ventures, Andreeson Horowitz, and Sequoia Capital.  Coindesk.com has a great article on the process and players here.

As someone interested in the trading of crypto-currencies, what I took from this process is the ICO vs. ico aspect.  Filecoin is an “ICO” to me.  A growing firm based on a market-validated concept that already has clients and is successfully attacking a definable and known marketplace.  They have a product, they have product fit, they have clients, it is reasonable to think they need capital to rapidly expand and do their best to corner the market.  As we have seen in the last 20 years, market dominance is possible and incredibly profitable (AMZN, GOOG, FB).

An “ico” to me is an idea that may or not become a product or service that is seeking to raise money from speculators.  We have seen lots of ico’s in the last 8 months and I believe many ico’s are promoted by financial fraudsters who are unlikely to be able to see their idea through to successful product and who know that to be true.

So as my colleagues and I seek to determine which crypto-currencies we will add to our platforms, and support via market-making liquidity provision, we look to not just the initial hype, but to the product fit of the underlying promise.  We continue to get approached to add ico’s to our platforms and liquidity pool.  We are offered pretty healthy “fees” for doing so.  But that is not good for our clients and therefore not good for us.  Crypto-currencies are here to stay and we will be too.

PS – found this Forbes article just as I was finishing this post.  Good read and corollary to my post.

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