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Published online by Cambridge University Press: 22 December 2023
By April 2018, just over 82 per cent of initial coin offerings (ICOs) created their tokens using the Ethereum platform. Other platforms followed suit, including Waves, a Russian-based project founded in 2016, the second most popular platform after Ethereum, NEO (or Antshares), a Chinese platform NEM, and Stellar, claiming to be the best choice for ICOs that do not require a smart contract, as most do not. The ICO is a method of raising capital, using blockchain technology as part of their business model to provide a particular product or service. Sometimes, tokens are granted for the purpose of gathering a group of individuals interested in blockchain technology, or for social media or marketing reasons. Buyers are led to believe that their tokens will increase in value, or that they will become developers of the project, blockchain providers or used in marketing purposes.
When a cryptocurrency start-up wants to raise money, it usually publishes a “White Paper” which sets out details of the project, how much funding is required, and the length of the funding campaign. During the campaign investors buy some of the new tokens with fiat or digital currency. If the funds raised do not reach the minimum level required by the firm, the monies raised may be returned to the backers and the ICO will be regarded as unsuccessful. The ICOs are advertised on the internet and social media as well as through the blockchain community and its publications. The popularity of ICOs grew steadily from 2013 onwards, reaching its peak in 2017 through to the first half of 2018.
Between 2016 and 2017, over 3,000 ICOs raised billions of dollars, with estimations ranging from $3 billion to $75 billion with more funds raised in the first six months of 2017 than in the previous three and a half years. The first expected mega ICO took place in 2018: Telegram raised over $1.7 billion in two separate private token sale rounds, followed by EOS unexpectedly attracting $4.1 billion.
Telegram Open Network (TON) was launched in 2018 but it was not until June 2019 that details of the project were published by a Russian research agency. The project was developed by the Durov brothers, who later fled from Russia to reside in Saint Kitts and Nevis.
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