Ethereum ICOs: Complete Guide

/Ethereum ICOs: Complete Guide

Do you wonder how can various ICOs be based on Ethereum platform? Let's find out together.

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Ethereum ICOs: Complete Guide 2018-06-27T12:51:17+00:00
Ethereum ICOs: Complete Guide

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  1. What is Ethereum ICO?
  2. What is ERC20?
  3. Ethereum as an ICO
  4. Successful ERC20 ICOs

The word Ethereum keeps coming up everywhere you read about the blockchain technology. It is important that you know what it is and where it came from. For that reason, in this article, we will discuss Ethereum ICOs, erc20 tokens and more.

What is Ethereum ICO?

Ethereum ICO is an open software platform on which other decentralized applications can be developed and deployed. If you want to run any decentralized programming code, then Ethereum is the open software platform to use.

Ethereum allows the use of smart contracts. A smart contract is simply a code built on a platform that facilitates the exchange of property, money, content, and anything of value. It is a code that self-executes when certain conditions are met.  It works on the basis of IFTTT logic. This means IF-THIS-THEN-THAT. When you initiate a contract, if the first set of instruction is met successfully, then it moves to the next step and so forth until the contract is executed. The actors within the network are motivated to fulfill their end of the bargain by collecting Ether tokens. This is the currency that is used to run the platform.

Ethereum Based ICO

An ICO (Initial Coin Offering) is a token sale in which companies use to raise funds for various online and offline projects. Most ICOs are now used to raise funds to develop crypto platforms. Ethereum blockchain platform has cemented itself as the go-to platform for many ICOs. This is because of its special features and security.

One special feature that has made Ethereum so popular is its use of the smart contract system. Developers can create any token to be run on this blockchain. The ability to run smart contracts standardized with ERC20 allows for any number of ICOs to run independently at any one time.

Another aspect is the security and transparency. All the smart contracts are recorded in an open public ledger for all participants to confirm making it difficult for any malicious individual to initiate fake contracts.

Ethereum is a kind of an environment that allows other developers to build their own projects. They can create their own decentralized applications (DAPPS).

What is ERC20?

This is a set of applications that developers must comply with to have their DAPPS or ICOs on the Ethereum environment or blockchain. it is a set of six functions that all smart contracts can recognize allowing seamless interactions.

Ethereum as an ICO

Ethereum is the blockchain on which most cryptocurrencies are now based. Its coin Ether or ETH is the second largest cryptocurrency after Bitcoin. While bitcoin blockchain is concerned more with the exchange of digital currency, Ethereum has added features allowing the use of smart contracts system. A lot more than currency can now be exchanged within the Ethereum blockchain.

How did Ether Start?

This platform was started in 2013 by a Russian computer programmer Vitalik Buterin. It was funded by an online ICO or crowd sale that took place in mid-2014. The developers put the system live on July 30, 2015, and floated about 11.9 million coins for the crowdsale. The rest of the coins are to be mined.

During the presale, 1 Bitcoin, that was valued at about $700 could give you about 2000 ETH. This was about 35 cents for 1 ETH.  According to Ethereum founder Buterin, ETH raised about 25000 BTC. If you multiply this by $700, then ETH raised about $18 million, surpassing all other ICOs.

At its ICO ETH sold at 0.0005 bitcoin. Today, it is worth about 0.05 BTC. That was about a 10,000% increase. Let’s put this into perspective.

At the ICO, ETH cost just 35 cents. That was about three years ago. The current price of 1 ETH is about $1,056, or about 10,000 cents. If in 2014 you had spent $ 1000 to buy ETH, you would have received about 285 ETH, which with today’s value would have been $302,000. That is an insane rate of return on capital.

With a circulating supply of about 97 million coins, Ether market capitalization is about $ 102 billion using the current market price. Though the price of ether seems to have stabilized for some time now since last year December, it still has a promising feature considering the features and the opportunities it offers to other upcoming currencies as well as other projects.

Successful ERC20 ICOs

Many ICOs have developed on the Ethereum blockchain adhering to the ERC20 function. This function creates a common platform that makes it possible for coins to exchange amongst themselves. There have been a lot of success and failure with the different ICOs that have used this platform. The biggest catastrophe was DAO, a decentralized autonomous organization that was based on the Ethereum platform. This project had managed to raise $150 million in an ICO but was hacked and lost $50 million. This event led to the hard fork of the Ethereum network creating Ethereum and Ethereum Classic. Ethereum started on the forked blockchain while the new network continued on the original chain.

Other than that failure, there have also been success stories. The most notable 3 ICOs on this platform have been Bancor, Augur, and Golem. We shall look at them in detail.

Bancor >>Bancor

Bancor was founded or developed by Bprotocol Foundation. Bancor rose quickly in popularity with its solution to rare tokens. Ethereum allows unlimited ICOs to run on its blockchain, but it fails to give a solution to the fate of the less popular coins.

Bancor came up with a solution to these tokens to enable you to dispose of them when you need to. Bancor issues smart tokens that you do not need to get matched with another person when you want to sell. The system allows you to exchange your coins with the smart contract built within the system.

The total supply of these tokens is 79, 384, 244 BNT with a circulating supply of 40, 772,871 BNT. Its current market cap is $273 million. The current price writing this article was $6.7. Its token sale happened in mid-2017 in the month of June raising about $153 million or about 390,000 Ether in about 4-5 hours!

There was a controversy with their ICO, they still managed to attract 10,885 buyers and making over 15,000 transactions. About 39,661,989 tokens were sold to the public.

Bancor tokens are promising considering the solution they bring to the industry. Anyone with Bancor tokens can easily exchange them for others in the network.

Augur >>Augur Logo

This is a software that utilizes crowd wisdom concept or idea.
It has three components:

  1. The Reporters
  2. The wagers
  3. The Market Creators

The reporters are those with REP tokens. They have the obligation of reporting the outcome of an event. Augur’s value is proportional (directly) to the given quality of those reporters. This follows that if they are dishonest, then their tokens lose value as Augur also loses. This obligates them to be honest.

The wagerers are like speculators that bet on the possible outcome of various events based on reports from the reporters while the market creators create an environment for the reporters to report.

These wagerers receive their rewards for their speculation, honest reporters receive their rewards from their wagerers and those reporters that gave wrong reports lose 20% of their tokens that go to honest reporters.

Augur ICO happened between August 17th and September 5th, 2015. The ICO sold 8,800,000 that raised about $5.4 million. Its presale price was about $0.5 or just 50 cents. Rep current price is $78, with a market cap of almost 867 million with about 11 million coins in supply. $1000 worth of REP token in 2015 is now worth $156,000. This is a massive return and it’s still considered undervalued by some people.

Golem >>Golem

Golem is a peer-to-peer network that wants to establish the world’s first decentralized supercomputer. If you have a project that requires a lot of CPU power, you can tap into this network and borrow some from others in the network. Golem has three kinds of users;

  1. Developers
  2. Requestors
  3. Software Developers

Requestors are those looking for CPU power from the network. They pay for this power using Golem tokens. The providers are the people who rent out the power of their computers and get money for that the same tokens while the software developers are those who develop the code used within the network.

Golem ICO took place on October 13, 2016, and ended on November 13, 2016. The ICO sold 820,000,000 tokens raising about $8, 596,000. The ICO price was $0.01. Its current price is now 0.524284, a 5,143% increase. This means that if you bought Golem tokens worth $1000 then, you’d now have $50,000. Its current market cap is $437.4 million.

Final Words

Cryptocurrencies have a promising future, but you have to identify the viable investment options. Lately, there have been numerous ICOs and digital coins coming up. Be careful with most of them and avoid rushing in before carrying out proper research.

The ERC20 function that governs the Ethereum blockchain has enabled the exchange of coins. It is now easy to trade different pairs of coins rather than relying on major coins and fiat currency. It has also enabled seamless transactions of contracts making it possible to exchange wealth other than coins while keeping low the cost of transactions.

Thanks for your time and keep reading our reviews of various commodities and developments in this space. We will always be glad to keep you in the know with the best and simplest information.

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