Fraudsters have given the term ICO a bad aftertaste with scam projects. While investors fear not to see their money again, honest ICO owners are struggling not to be put into the scam drawer. The ICO hype clearly seems to be over. But a UK-based crypto company believes that ICOs can still be an excellent source of money – if they comply with certain ethical principles.
As BTC-ECHO reported in May of this year, many ICOs are frauds who smell the fast money. Only eight percent of all ICOs are successful and are listed on crypto exchanges. Only recently, Civil was surprised when the Blockchain project had to announce the failure of its crowdfunding campaign – it had not been able to reach the soft cap. Accordingly, the company had to pay the investors back their money. Since this “money-back guarantee in the event of failure” is currently the only protection for investors, ICOs are anything but secure.
ICOs in a new light
As Crypto Briefing reported on 19 October, the British holding company Investx intends to give ICOs a different connotation and set new ethical standards with its own offering. The INX token is intended to enable the purchase of dividend shares in private companies. The main focus here is on opening up SME investments to a broader range of investors, including private investors. The British Financial Conduct Authority (FCA) has already given its approval.
The planned public sale of its utility token INX is to follow strict principles. With the creation of a reserve fund and a sustainable token supply, the company wants to reduce the risk for investors. In this context, David Atkinson, Director of Holochain (HOT), advised Investx on the development of the ethical ICO.
What is an ethical ICO?
Atkinson firmly believes that public sales will restore confidence in the market. His own company Holochain promises a “more humane Internet” on the website, the ICO was developed ethically correct. Peter Edgar, CEO of Investx, asked Atkinson for support in the development of the INX ICO when he became aware of these promises.
Atkinson believes that an ICO is ethical if the token sold has a real value based on a real need. To do this, the white paper must contain the future purpose of the token and explain exactly how it would benefit its owners. He explains:
“It’s up to the projects to clearly present their product and show that there is a demand for what they build. With Investx, for example, they need to be able to show that there are private buyers who want to use the blockchain to buy dividend shares in private companies.”
Since the INX tokens are useful because they facilitate the purchase of shares, Atkinson recognizes them as ethical. The special benefit is the saving of legal costs. It also avoids the time delays normally associated with the purchase of dividend shares.
It is well known that it is very difficult to strip off a bad image. However, the approach that Holochain and Investx pursue with their ethical ICOs promises in the long term to have the potential to improve the reputation of this crypto crowdfunding strategy. The motto is still not to blindly invest in promising projects, but to carry out detailed research in advance. The criteria for ethical ICOs can be quite helpful thereby.