The spring and summer of 2017 have seemingly been defined by the vast amount of Initial Coin Offerings (ICOs) flooding the cryptocurrency world. Some projects had more merit than others, and some were just looking to make a quick buck. Poor project leadership and delivery have largely given ICOs in general a bad name. However, I do not think that they are all bad.

In Defense of ICOs

At a recent Bitcoin and Blockchain meetup I attended in Chicago, one of the members mentioned he was making an ICO to distribute tickets to an event. The ICO would be completely free and he just felt it would be a fun way to distribute tickets. Everyone — myself included — chuckled at the ludicrousness of it all. “Another ICO? Ha!” I thought to myself. ICOs have become somewhat of a joke among many in the cryptocurrency community, and yet they continue to attract asinine amount of investments.

I want to make it clear that I am not defending scam ICOs and empty projects. Rather, I am defending the idea of ICOs themselves. We do not have to throw the baby out with the bathwater here, especially since ICOs are genuinely clever ways to raise money in a distributed manner.

In my opinion, the ICO concept is not too different from what we see in GoFundMe or Kickstarter. A company or individual promises a product, creates a pitch about it, and announces that they require funding to make the product or service a reality. As a side note, I would like to point out that Kickstarter and GoFundMe projects also have instances where companies or individuals are unable to deliver their products or services, so that is not exclusively a cryptocurrency problem.

Where ICOs and Kickstarter or GoFundMe projects differ wildly is the middleman. With Kickstarter and GoFundMe, the platforms themselves take a cut of all donations and pledges. ICOs’ pledges go directly to the relevant businesses, projects, or individuals. They are more efficient in this regard and have less overhead for their startup costs. Cost reduction usually correlates to a higher success rate.

ICOs also allow people who may not have been able to invest using traditional means to become part of a company. In fact, that is the promise offered by all of cryptocurrency. With traditional investing, one must be approved for a brokerage account by providing details regarding one’s net worth and assets before he or she can even begin to purchase and trade shares. In contrast, cryptocurrency just requires that one have enough money to purchase the amount one wishes to buy. In the case of ICOs, they simply require that one has the necessary cryptocurrency — usually Ethereum — to participate. This kind of market freedom is a liberating experience for investors and companies alike. As long as investors are legally eligible to participate and they have the crypto to back it up, everything works well.

I do not deny that there is a lot of dumb money bloating the cryptocurrency space, but just because there are some bad or dishonest projects does not mean ICOs themselves are bad ideas. They are helping to free the market, which means they are helping to free the world.

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Dariusz is a Digital Anthropologist who has been closely following the world of cryptocurrencies since 2014. He has been somewhat of a crypto-evangelist, trying to educate more people on the exciting realm of cryptocurrency. During his time at University College London, his Master's dissertation focused on how communities inhabit, modify, and create virtual places via social media.