Initial Coin Offerings (ICOs) are the latest craze to sweep the world of finance and technology. Startups and blockchain enthusiasts have raised over USD 3.5 billion this year through ICOs.
According to a report by CNBC, the amount of money raised by ICOs even surpassed early stage venture capital funding in the months of June and July this year.
It’s worth pointing out that most ICOs raise funds by offering utility tokens that give investors access to an upcoming service or application. Many of these services ands applications are still being built.
Bucking the trend
Enter Binary.com, a profitable and debt-free company founded in 1999. It has recorded a turnover of over USD 3 billion since it launched its patented binary options trading platform in 2000.
The Binary.com ICO aims to buck the trend by offering securities-backed tokens that reward you with dividend payments directly tied to the company’s financial performance –– just like shares. It distributed nearly USD 12 million in dividends to its shareholders last year.
Furthermore, its tokens can also be converted into ordinary shares, signaling its intent to provide prospective investors with tangible financial benefits.
Not just an ICO, but an “IPO on the blockchain”
Binary.com is approaching its token sale as a genuine replacement for an IPO. That’s why it’s placing great emphasis on corporate governance, investor disclosure, and transparency. This measured approach includes the release of an Information Memorandum with full disclosure of its financial history and possible risk factors that may affect the company’s bottom line.
But why choose to do an “IPO on the blockchain” in the first place, instead of a more conventional IPO?
“An IPO in itself is a cumbersome process that’s remained relatively unchanged for decades. Some would say it’s ripe for disruption,” says Binary.com Founder & CEO, Jean-Yves Sireau.
“By opting for the ICO route, we can go beyond the limitations of a traditional IPO. We get a wider reach of potential investors, lower costs of trading, and an immutable audit trail of transactions on the blockchain,” adds Sireau.
The advantages are clear: IPOs and stock exchanges are dependent on electronic trading systems that are playing catch-up to blockchain technology.
Blazing a new path
This is the first time we’re seeing an established company such as Binary.com choose an ICO as a means of raising fresh capital, instead of going down the traditional route of an IPO.
Backed by 18 years of history with a proven business model and established revenue streams, its decision to hold an IPO may leave a lasting impact if other companies of similar maturity are inspired to do the same. Only time will tell.