Six Chinese blockchain companies have released a joint protocol designed to manage financial risks for initial coin offerings (ICOs) in China. The joint protocol, 'Guiyang Blockchain ICO Consensus', was proposed by Guizhou Blockchain Industry Technology Innovation Alliance, Zhongguancun Blockchain Industry Alliance, Blockchain Finance Association, Guiyang Blockchain…
Six Chinese blockchain companies have released a joint protocol designed to manage financial risks for initial coin offerings (ICOs) in China.
The joint protocol, ‘Guiyang Blockchain ICO Consensus’, was proposed by Guizhou Blockchain Industry Technology Innovation Alliance, Zhongguancun Blockchain Industry Alliance, Blockchain Finance Association, Guiyang Blockchain Innovation Research Institute and two other unnamed entities, according to a report from the China Money Network.
There are currently 43 platforms in China that provide ICOs. The most, of which, are located in Guangdong, Shanghai and Beijing, which account for more than 60 percent of the total number of platforms.
Interestingly, the release of the Chinese ICO protocol comes at a time when the U.S. Securities and Exchange Commission (SEC) announced yesterday in a report that DAO tokens are a security and that they should be regulated.
According to the report, The DAO was a centralized organization, raising the question as to whether The DAO had ‘sole discretion or full control’ over the responsibility of investor losses due to security malfunctions.
It was in 2016 that ICOs began to gain traction. In 2014, $26 million was raised through crowdfunding; in 2015, that figure fell to $14 million. The following year ICOs took off, helped by The DAO which raked in over $150 million after releasing in excess of one billion tokens. Known as the biggest ICO, at the time, its eventual downfall was due to a security hack that saw the loss of $59 million.
The DAO hack was the first in a number of hacks that have taken place since ethereum came on the scene.
On the 19th July, smart coding company Parity reported a security breach and the loss of more than 150,000 ether, worth $35 million at the time.
As ICOs are an unregulated means of crowdfunding in digital currencies they carry significant risks, namely investment and security risks. Yet, that doesn’t seem to have deterred investors from putting their money into them.
Research from financial research firm Autonomous NEXT indicates that ICOs have been enjoying a thrilling ride, particularly during the first half of 2017.
In the first six months nearly $1.3 billion was raised from over 50 ICO projects, outpacing venture capital investment in blockchain and bitcoin organizations. It adds that over a 30-day period, $600 million was also raised.
The report notes that while the ICO market has the attributes of a bubble, its underlying innovation features a platform shift in the digital world.
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Last modified: January 24, 2020 11:59 PM UTC