Investx has brought in Holo Director David Atkinson as an advisor, as it prepares to launch its ethical ICO. Their efforts to establish and follow a set of ethical principles should bring a welcome breath of fresh air into the toxic ICO arena.
Ethical ICO an Oxymoron
An oft-quoted study by Satis Group found that around 81 percent of ICOs were scams. When added to dormant or failed ICOs, less than one in nine has proven successful.
Investx is an established crowdfunding platform for small to medium-sized enterprises (SMEs) in the U.K. With an ICO planned for the 4th quarter of the year, they have now announced the arrival of Holo Director David Atkinson as an advisor, with the intention of conducting an ethical ICO.
What Is an Ethical ICO?
Have you ever seen an ethical ICO? If not, it’s probably because they are scarce beasts. If Satis Group’s study seems too severe, The Wall Street Journal conducted a study that is somewhat more palatable, finding an almost 20 percent scam rate among ICOs.
The Holochain ICO of April this established a set of principles that define what an ethical ICO is. These principles include having a ring-fenced reserve of fiat to back the tokens being issued, releasing tokens as the business grows, so that their value retention potential is improved, and offering shares in the company to participants.
Investx aims to pursue this model for its ICO, so as to better protect investors from risk and boost the value of the token. Per Peter Edgar, CEO of Investx:
“We wanted to differentiate our ICO by openly committing to ethical ICO principles. These are steps we’ve taken to stabilize the token, lay foundations for future growth, and commit to transparency that holds us accountable to token holders… we’ve created a blueprint for future ICOs that wish to be held to similar standards.”
If Funds Are Locked Away, How Does the Company Grow?
One question that might be asked is that, while holding reserves of fiat might help protect investors, it potentially slows the growth of the company. If the point of an ICO is to raise funds to invest in developing a company, what is the point of locking funds away?
That question aside, there is no doubt that an ethical ICO is one way to soothe the nerves of an increasingly reluctant would-be ICO participant. As David Atkinson says:
“ICO investors are looking for something extra these days–honesty, openness, accountability, and moderation. When we conceived the ethical ICO model for Holo, it was about giving investors assurances that we would keep to these principles.”
A Step in the Right Direction or a PR Stunt?
The economic merits of some of the ethical ICO principles aside, Investx, since 2010, has provided a valuable service in allowing retail, accredited, and institutional investors worldwide the opportunity to invest in SMEs in a cost-efficient and transparent way.
By using tokenized blockchain technology, their ICO will further their efforts to generate liquidity in an otherwise illiquid asset class.
Have your say. Is the ethical ICO model likely to appeal more to potential investors?
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