Cryptocurrencies are able to fulfill a variety of needs, because they can be used for multiple purposes. In fact, you will find that there are no two cryptocurrencies have the same characteristics. The study by John P. Conley from Vanderbilt University, found that there are several main elements that can be found in cryptocurrencies, and the proportions of these are what affect the value of the token during the ICO.
One of these is using the cryptocurrency as transactional, and this is the characteristic that most affects is daily value. When you consider the most famous cryptocurrencies, such as Bitcoin, this is feature that makes it highly popular with a range of different investors. They can be used for purchasing different items in the same way as normal currencies. This is the type of currency that is not traded often, rather, people will hold on to their currency and use it when necessary. This makes it possible to benefit more from any increases in value. For the entrepreneurs who are choosing ICOs, this helps to maintain some stability.
There is also the aspect of profit sharing to consider with ICOs. With more traditional financing, when there are profits they are given to the investors as dividends based on the stocks that they own.This is why investors choose to purchase shares, as they can depend on a return from their investment. This is not the case with ICOs, as investors are left not too clear about what will happen in the future. This is because it is challenging to estimate the revenue streams. Most investors can get a return once the values of their cryptocurrencies increase. However, with this risk, there is also the possibility of making a substantial return.
With ICOs, those who purchase tokens have much more control over a range of things that happen with a project. They can even vote on what is happening with the operations of the company, as well as approve any new stakeholders that are hoping to become a part of the platform. This is different from the traditional shareholder, who only has voting rights at certain times and limited overall control of all the decisions.
The Economic Benefits of ICOs
It is incredibly simple for an upcoming entrepreneur to choose an ICO so that they can raise funds as quickly as possible. This is because the money that they are looking to raise can be done with less regulations and rules in place, as it enables anyone to make an investment if they wish to do so. Furthermore, the company that is looking at offering the ICO does not need to commit to achieving anything at its launch. All that is needed is a clear and inviting value proposition. It is necessary for any company looking at an ICO for funding to be clear about the rules and regulations that will govern the decisions in their area.
The study by Catalini and Gans reveals that essentially, money needs to be tightly controlled, especially when it comes to supply. This is where there is a challenge with cryptocurrencies. There is less control, and whereas more traditional investing may encourage savings, this is not the case with ICOs. Instead, the company offering the ICO will hold on to some of the tokens in the event that they need future funding. With all these points considered, it remains clear that more startups and entrepreneurs will continue to tailor make ICO’s that meet their specific needs.
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