Why ITPO Reduces Risk And Makes The Market Potentially More Open

First point: When a person or a group wants to start a business, there are always only 2 main options. Using savings/angel investments or borrowing capital from financial entities such as banks, VCs and incubators. Now, there is a third solution. Decentralized capital from a wide community which may or may not need to be accredited depending on the circumstances and vehicle used to raise funds.

This is not new. Crowdfunding sites have existed for a long time, but there were no cryptocurrency payment alternatives and even now that there are, these platforms for the most part have stayed reliant on FIAT. Many successful projects from these kickstarters have later started IPOs to further expand, scale and bring projects to the public.

Second point: In 2016 through 2017 there was an explosion of ICOs virtually all of which have turned out to be scams (80%+). Many ideas, either intentionally or unintentionally, have either from the start or later on exploited their investors. Products that would never see the light of day or were impossible to actualize kept being promoted in the guise of a new and popular technology namely Blockchain. These projects would rarely be more than a paper or a few slides. Creating a functional and profitable product is hard enough as it is, but with unprecedented technologies it ought to be even harder meaning the few that succeed are set up for big profits. This, the general ambiguity of it and how easy anyone could invest made the hype and inevitable big fall of the 2017 ICO craze.

The Aftermath

Suddenly, start-ups received huge amounts of money without regulators checking. No technician or critic of any sort looked behind the curtains. The crash should have been obvious, but the band-wagon charged at full steam ahead regardless.

Following the new trends iterations like IEO (Initial Exchange offering) or IDO (Initial Dex Offering) have tried to capitalize on reviving the broken dreams of the ICO wave. They failed. Investing in real deals or business opportunities remains a numbers game, distrustful in nature, and risky by design.

This makes it difficult to promote new technologies in a new way. Authentic companies are swept up by less legitimate or even malicious ones and struggle to be differentiated from them. The reality is that start-ups then have to raise capital on their own, but are at least not censored or in any other way held back by a third party asking to meet certain deadlines and standards.

This forces start-ups to become profitable and self reliant quickly and when they succeed, they are a done deal. They work. The risk for investors and start-ups evaporates without a trace, but so does their leverage.

Covid-19

In the context of Covid, the development of a business that depends a lot on physical factors faces difficulty. The world has gone remote. This has forced many bankruptcies or compromising transformation.

As dreadful as this has been for most sectors, the crypto market has benefited greatly. Spending has gone down drastically; any new investments made have gone anywhere from a meme-based Doge coin investment to an all-in in new-crypto-project-token. Crowdfunding through decentralized finance is booming.

The cryptocurrency market is a new solution for businesses to run the traditional way to jump into new markets. An opportunity for them to reach fresh customers, adopt new innovations and a new way of thinking. There is no pressure from bank interest rates or credit loans of any sort. No dependencies with cash flows only being limited by non-governmental factors. The different regulations built for crypto mean different tax rates, paperwork or the complete lack of thereof. This has incentivized thousands of projects to pivot.

The market for startups is an unprecedented one, especially the blockchain niche. There is still a great lack of experience in the practical implementation of project ideas. Vetted projects pivoting on the other hand have a real shot to eventually and successfully IPO one day thanks to their cash flow, community and other assets such as their products to name one.