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Everything old is new again.
The talk of the town in the cryptocurrency and blockchain space these days is the concept of an initial coin offering (ICO), which has been used to raise over $1.5 billion by various startups, open-source projects, and other organizations since the start of the year (according to Coinschedule).
If you’re unfamiliar with ICOs, check out this explainer from cryptofinance research group Smith + Crown.
While nearly all of the current token offerings are made via the Ethereum blockchain, this is not the first time that an alternative digital asset craze has happened in the greater Bitcoin and blockchain ecosystem. Long-time Bitcoin users have seen plenty of instances of hysteria around altcoins, appcoins, and even bitcoin-denominated securities offerings throughout the years.
Having said that, the hype around Ethereum-based ICOs has surpassed any of the alternative token crazes from the past, especially when considering the effect it has had on the ether price, which is the underlying token of the Ethereum platform.
The bitcoin-denominated securities found on sites like BTC-TC, Bitfunder, and Havelock Investments are one of the more interesting parts of Bitcoin’s history because they allowed anyone to raise funding for their business or project at the click of a button in a manner that may have been even easier than what is seen with the current ICO phenomenon. Those newly created assets could then be traded on the aforementioned, legally-dubious exchanges.
As the founder of BTC-TC, Ethan Burnside was once at the center of these sorts of offerings in the Bitcoin space. Things changed dramatically when he received a letter from the SEC in late 2013. After exploring options with his legal team and realizing there was no way to continue operation, the tough decision was made to gracefully shut down the exchange. Today, Burnside spends most of his time working on his social casino gaming startup Yapping Moose Entertainment.
Recently, an SEC report revealed that Ethereum ICOs can also be considered securities.
I reached out to Burnside to reflect on BTC-TC and get his thoughts on the hype around Ethereum-based ICOs. Our question and answer session can be seen below:
Kyle Torpey: How do you think the ICOs of today compare to the assets that were traded on BTC-TC? Do you feel many of either set of offerings are/were legitimate?
Ethan Burnside: It’s amazing how fast things change. When we launched the exchange in late 2012 it was a completely different world. There was a lot more skepticism about the future of Bitcoin. Governments hadn’t recognized it yet. It was easy to get for free by mining or from a faucet. If you offered a guy on the street a choice between 100 Bitcoins and a hamburger they’d probably take the hamburger.
In that context you can see the scope is completely different. In most cases the assets traded on BTC-TC were individual’s pet projects, things like small one-man mining operations and other one-man crypto endeavors. This was actually our intent because the BTC-TC Terms of Service made it clear that the platform was intended for learning and experimentation. We turned down or were otherwise passed over for many much larger offerings because we refused to move outside that scope in our terms. So it’s not really an apples to apples comparison to what is out there today where ICOs I’ve seen are larger teams with actual incorporated entities. If I had to draw a parallel to what is out there today, BTC-TC was probably more like a GoFundMe than anything else.
I do think that many of the offerings on BTC-TC were legitimate initially, started by operators with good intentions. Where a lot of them went south is when they realized they could come under fire for the same regulatory issues BTC-TC itself had. With the close of BTC-TC several operators went dark out of fear, others took the opportunity to run, and others just didn’t have the business acumen and were in over their heads from the start.
Fast forward to the ICO’s today and I see a lot of the same behaviors being repeated. Entrepreneurs seeing an opportunity to fund a project. Scammers seeing an opportunity to fleece investors. Investors seeing an occasional success and thinking they don’t want to miss the next one. I’m sure some of the offerings are legitimate. I’m also certain many of them are not. It seems like no one learned the first time around, but reality is that these cycles have been going on since the beginning of time. Each new generation it seems has to learn the hard way.
FAQs
Ethereum itself was initially funded through an ICO, raising a total of $18 million between July 22 and Sept. 2, 2014. Investors in the Ethereum ICO received Ether (ETH) in exchange for Bitcoin (BTC), with more than $2.2 million worth of Ether being sold within 24 hours of the ICO going live.
Who is founder of Bitcoin? ›
Bitcoin was created by an anonymous person or group using the pseudonym Satoshi Nakamoto. Nakamoto published a whitepaper titled "Bitcoin: A Peer-to-Peer Electronic Cash System," outlining the concept of a decentralized digital currency.1 The true identity of Satoshi Nakamoto remains unknown to this day.
What was the first crypto ICO? ›
The first token sale (also known as an ICO) was held by Mastercoin in July 2013. Ethereum raised money with a token sale in 2014, raising around 31,000 BTC in July, equal to approximately $18.3 million at the time. ICOs and token sales became popular in 2017.
What is the highest ICO crypto? ›
The EOS ICO holds the record for the largest ICO ever and represented nearly a quarter of the entire ICO boom of the era in which it launched. Over 1 billion EOS tokens were sold, purchased using Ethereum's ether cryptocurrency (ETH), and distributed over 350 weekly periods, each lasting five days.
How does ICO make money? ›
An initial coin offering (ICO) is an event where a company sells a new cryptocurrency to raise money. Investors receive cryptocurrency in exchange for their financial contributions. In many ways, an ICO is the cryptocurrency version of an initial public offering (IPO) in the stock market.
Who owns most Bitcoin in the world? ›
Satoshi Nakamoto, the pseudonymous creator of Bitcoin, is believed to own the most bitcoins, with estimates suggesting over 1 million BTC mined in the early days of the network.
How much Bitcoin does the founder own? ›
But there are some compelling theories for who Satoshi really is — and who might control the 1.1 million bitcoin in known Satoshi wallets. If Satoshi is alive and in control of his keys, then he has access to holdings worth around $70 billion at today's prices.
Who owns Ethereum? ›
Ethereum is an open-source blockchain platform built by hundreds of thousands of developers from around the world. Since Ethereum is a decentralized network, no single entity controls or owns it.
Who is the disgraced CEO of bitcoin? ›
Sam Bankman-Fried, founder and CEO of the collapsed cryptocurrency exchange FTX, late last week was convicted of all seven counts of fraud, money laundering and conspiracy to commit these crimes. Was he a criminal from the start, or did he get in over his head?
Who owns or runs bitcoin? ›
Bitcoin is not controlled by any single group or person. Instead, it is governed by multiple stakeholders — including developers, miners, and users. Developers write the code that makes Bitcoin run; miners validate transactions; and users put the software to work by trading, transacting, holding, and more.
Bitcoin is controlled by all Bitcoin users around the world. Developers are improving the software but they can't force a change in the rules of the Bitcoin protocol because all users are free to choose what software they use.
Who owns the blockchain? ›
In Bitcoin's case, blockchain is decentralized so that no single person or group has control—instead, all users collectively retain control. Decentralized blockchains are immutable, which means that the data entered is irreversible. For Bitcoin, transactions are permanently recorded and viewable to anyone.
What was the first crypto before Bitcoin? ›
Key Takeaways. The first cryptocurrency was eCash, created by David Chaum's company DigiCash in 1990. There were several attempts to create a viable and accepted cryptocurrency before Bitcoin. eCash, B-money, Bit Gold, and Hashcash were very influential in Bitcoin's creation.
What is the first legal crypto? ›
El Salvador became the first country to accept Bitcoin as legal tender.
What was the initial ICO for Ethereum? ›
What was the ICO price of Ethereum (ETH)? The ETH token ICO price was roughly $0.31. The price of the Ether token gradually increased during the ICO, from 2,000 ETH for 1 BTC to 1,337 ETH for 1 BTC. The minimum amount for participation was 0.01 BTC.
Was Ethereum the first ICO? ›
Though the majority of ICOs have taken place on Ethereum, the first ICO — Mastercoin — took place on the Bitcoin network. In 2013, the Mastercoin team aimed to create a Layer-2 protocol on Bitcoin that would enable the issuance of new cryptocurrencies.
What is the secret ending of ICO? ›
When you gain control of Ico at the end of the game, walk to the cliffs and then make your way up the beach. When you come to a large rock, look for watermelons around its base. Pick up a watermelon and carry it to Yorda along the shore. A different ending will play.
What was the initial price of Ethereum? ›
At this time, 1 ETH was sold for $0.31 as part of the crowdfunding campaign. Here's a timeline with key price points, price swings, and some corresponding media releases at the time: August 14th, 2015: The first price spike ETH sees from it's initial release price of just over $0.3 per coin.
