Oleg Zabluda's blog
Monday, June 05, 2017
 
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a new wave of what are called Initial Coin Offerings (ICOs) [...] ICO “coins” are essentially digital coupons, tokens issued on an indelible distributed ledger, or blockchain, of the kind that underpins bitcoin, a crypto-currency. That means they can easily be traded, although unlike shares they do not confer ownership rights. Instead, they often serve as the currency for the project they finance: to pay users for a correct prediction, as does Gnosis; or for the content users contribute. Investors hope that successful projects will cause tokens’ value to rise

In a way, bitcoin was the first ICO—except that instead of putting money in directly, investors had to buy computing gear to “mine” (ie, mint cryptographically) the tokens. Bitcoin inspired hundreds of variations—“alt-coins”. But these involved the tricky business of creating a new blockchain. Today most issuers simply write a “smart contract” on Ethereum, a rival blockchain. This piece of code then automatically creates tokens when it receives “ether”, the coin of the Ethereum realm. Issuers typically publish a “white paper” (a prospectus of sorts) and market their undertaking on social media.
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http://www.economist.com/news/finance-and-economics/21721425-it-may-also-spawn-valuable-innovations-market-initial-coin-offerings

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