It’s hard not to be astonished by the amount of money consumers have been throwing at initial coin offerings (ICOs) lately.
The new fundraising model allows developers to sell digital ‘tokens’ to raise money for decentralized projects. Two recent events highlight why there may be cause for concern.
Earlier this month, web browser startup Brave made $35m in seconds selling its basic attention token (BAT). And, soon after, a relative unknown called Bancor pulled in $150m in hours – the largest ICO in history – despite claims about possibly sketchy code underlying the project.
Like the majority of recent ICOs, these projects were built on the ethereum blockchain. And what they have in common is ERC-20 – a standard that allows wallets, exchanges and smart contracts to interface with a variety of tokens in a common way.
Yet, while standards exist for good reason, when combined with a lack of regulation in the space, some believe ERC-20 may be making it too easy for unscrupulous projects to get into the game.