Vitalik Buterin is Bringing Revolution to ICO

Vitalik Buterin is one of the most important people in the world of digital currencies. He was the founder of Ethereum which is currently the second most popular and the second most valuable digital currency in the world. Because of that, he has a huge influence in this area and almost all his reactions influence the value of Ethereum, Bitcoin and other digital currencies in the market. Recently, Buterin has announced that he will be introducing some changes to the Initial Coin Offering process and many are saying that those changes will revolutionize the issue of ICO.

With ICO, companies sell digital tokens that they create themselves in order to collect money for their business. So far, using Ethereum as the currencies, these Initial Coin Offerings have raised more than $1.3 billion. In the United States, their top financial authority, the SEC, has announced that it will be treating those ICOs and the tokens involved in that business like it treats all other securities.

ICOs displayed some great characteristics but it also proved that there are certain flaws that need to be repaired. Because of that, Buterin published a White Paper that he wrote together with Jason Teutsch in which they introduced a new ICO and they named it Interactive Coin Offering. The new type of ICO or rather a new approach to the ICO mostly deals with the possibility of bringing back the basic economic and market principles to this area. Besides they also outlined a plan in which that could be achieved.

The first step that Buterin and Teutsch are proposing is to eliminate the upfront cap during the crowdsales, a thing that has become almost a standard in today’s initial coin offerings. This approach would provide much more people with the opportunity to participate in ICOs and the situations in which 130 people bought tokens in the value of $30 million in only 30 seconds would be avoided. In this case, people could simply keep buying as much as they wanted, and this would allow more people to be involved with every ICO.

The second step is a bit more controversial suggestion as it has not been invoked ever before. They suggest that the new ICO would also feature an option for an investor to cancel his or her purchase. This feature will completely bring ICO to the path of following the laws and regulations. According to Buterin and Teutsch, this would provide investors with the opportunity to enter ICOs on the basis of the behavior of other investors which would potentially lead to the market equilibrium.

They also suggest that ICO should also involve the feature of ‘limit order’, a feature that became a standard in the stock exchanges. This feature would enable investors to bid a certain amount of money for a certain amount of tokens. In this regard, it needs to be said that Buterin and Teutsch are not suggesting a completely new ICO but rather the improvements and the upgrade of the existing system that has been built on Ethereum blockchain technology.

Written by Vedran Ostojic

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