There’s an unmistakable buzz around Initial Coin Offerings (ICOs) at present that is proving hard to ignore. For many, they represent an exciting new financial frontier with high rewards available to those willing to brave the risks. Now, some of the biggest names in showbiz and sport are jumping on the bandwagon.
ICOs are unregulated by any central authority and offer a return in cryptocurrency on investments made in legal tender. Although they have generally been used to fund digital currencies to rival Bitcoin, some are now acting as funding sources for a range of start-up enterprises.
The ‘wild west’ nature of ICOs and their lack of centralized regulation has alarmed many, including the Chinese government who at the beginning of September implemented a ban on ICOs which remains in place. Hailing them as ‘disruptive’ and ‘illegal’ the Chinese central bank’s measures reflect widely-held concerns throughout the financial establishment. Then of course there’s the attention from the Securities Exchange Commission (SEC) which is also considering a clampdown.
These concerns do not seem to bother some though. Heiress Paris Hilton has been overt in her support for LydianCoin, whilst boxer Floyd Mayweather (who presumably has cash to spare following his victory over MMA superstar Conor McGregor back in August) recently boasted of being about to make ‘a $hit t$n of money’ on the Stox.com ICO.
Support for Stox – which has so far raised over $30 million, despite its rather vague business plan – has also been championed by Barcelona striker Luis Suarez, whilst Mayweather has also leant his weight to the Hubii Networks ICO. Perhaps unsurprisingly for someone who dubs himself ‘The Money’, Mayweather’s latest interest has seen him pledge his support on Twitter for cryptocurrency ICO Centra. He can’t seem to get enough, it seems.
These celebrity endorsements are manna from heaven in terms of publicity for these enterprises. Both Hilton and Mayweather have millions of followers each on Twitter and Instagram and are able to get the message out via these platforms in no time. It’s small wonder that many ICOs have managed to raise millions of dollars in investment in often very short spaces of time.
Of course, it should be noted that celebrities like Mayweather, Hilton and Suarez are not exactly short of money and are presumably insulated against potential losses. Yet there is no denying that the emergence of cryptocurrencies and the evolution of the blockchain technology that supports them is shaking the financial system to its core and making some canny investors a great deal of money.
It’s unclear of course how much Mayweather is hoping to make from his various ICO investments, or indeed whether he even needs the money. Having retired with a 50-0 record after the McGregor bout, perhaps he’s just after some excitement.
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Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.