Why ICO made a mistake and blockchain will still lead the era

Since the release of the one-size-fits-all policy for ICO, many people have only just learned about this kind of operation. It can be seen that the Internet is all about information asymmetry. Perhaps there are many concepts that we are not familiar with or even do not know about, but are now making a big splash in a certain field!

For example, Bitcoin and blockchain. Blockchain is a relatively popular new concept, which contains two concepts: technology and finance. Bitcoin originated from the financial industry. As a pioneer of Internet finance, it is necessary for us to understand the common sense of these aspects.

Basic concepts of blockchain

The word blockchain has two meanings:

• In a narrow sense, blockchain is a data structure that links data blocks in chronological order and uses cryptographic algorithms to ensure that the data stored in this way cannot be tampered with or forged, and can be easily verified.
• Blockchain technology in a broad sense refers to the general term for a technical system that includes this data structure and a series of technologies such as peer-to-peer (P2P) networks, consensus mechanisms, and smart contracts. It is sometimes also called a distributed ledger.

Blockchain technology is considered to be the most disruptive technological innovation since the invention of the Internet. It relies on cryptography and ingenious mathematical distributed algorithms. On the Internet where trust relationships cannot be established, it can enable participants to reach a consensus without the intervention of any third-party center, solving the problem of reliable transmission of trust and value at a very low cost.

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The main characteristics of blockchain:

• Decentralization: Due to the use of distributed computing and storage, there is no centralized hardware or management agency, and the rights and obligations of any node are equal.
• Openness: Except for the encrypted private information of the transaction parties, the blockchain data is open to everyone. Anyone can query the blockchain data and develop related applications through the public interface, so the entire system information is highly transparent.
• Autonomy: Blockchain uses consensus-based norms and protocols (such as a set of open and transparent algorithms) to enable all nodes in the entire system to exchange data freely and securely in a trustless environment, so that trust in "people" is changed to trust in machines, and any human intervention is ineffective.
• Information cannot be tampered with: Once the information is verified and added to the blockchain, it will be securely stored. Unless more than 51% of the nodes in the system can be controlled at the same time, modifications to the database on a single node will be invalid.
• Anonymity: Since the exchanges between nodes follow a fixed algorithm, the data interaction is trustless. Therefore, the counterparty does not need to publicly reveal their identity to gain trust in the other party, which is very helpful for the accumulation of credit.

Blockchain finance, an important application of blockchain technology, is considered a disruptor of traditional finance. Bill Gates once said: "If traditional banks do not change their thinking, they will become dinosaurs that will become extinct in the 21st century." Before, we just regarded it as a joke. But after blockchain technology was discovered, this sentence was repeatedly quoted. We can see the unique advantages of blockchain in dealing with financial business.

Why are ICOs banned?

The recently banned ICO stands for Initial Coin Offering, which is actually the token version of IPO (Initial Public Offering - the public issuance of stocks, commonly known as listing). It has always been regarded as a "low-profile version of IPO" in the virtual currency circle.

So in essence, ICO is an innovation in the financing model of blockchain technology, and its characteristics are closely related to blockchain technology. The funds raised by ICO are not legal currencies such as RMB, but encrypted digital currencies such as Bitcoin and Ethereum. Therefore, because ICO was banned, these currencies have also experienced a sharp drop recently.

Li Ge, CEO of Shengcai.com, said: The rapidly growing market size and exaggerated return on investment have caused ICO to accumulate huge risks. Many trading platforms do not have legal status recognized by the law. Some initiators' ICO projects may even involve illegal possession of funds, suspected of illegal fundraising or fundraising fraud. At the same time, due to the anonymity of virtual currency, some ICO projects may even involve the risk of underground illegal transactions or money laundering.

As an independent third-party Internet financial platform, Shengcai.com has witnessed the crazy development and regulatory norms of the Internet financial industry since its establishment more than two years ago. The current ICO situation seems to be quite similar to the chaos in the Internet financial industry before the regulation. Both are facing problems such as no regulatory control of the platform, no review mechanism for the project, no review standards for the initiator, and no entry threshold for investors. There are also blind speculation driven by huge profits and "everyone pushes down the wall when it falls" without specific analysis of the specific situation.

Fortunately, Internet finance is ultimately a good money driving out bad money. All the big platforms that have grown up are self-disciplined and actively cooperate with the regulatory policy to make compliance adjustments. Shengcai.com also strictly follows the regulatory requirements to contribute to the compliance of the industry. But the ICO market can't wait for such a plot. On September 4, the central bank and many regulatory departments jointly issued the "Notice on Preventing the Risks of Token Issuance and Financing", which defined ICO as "illegal financing activities". All ICO token trading platforms were closed and the stock was cleared.

The announcement further clarified that appropriate and comprehensive supervision will always be gradually improved with the development of the industry. The real intention of the central bank is to regulate Bitcoin transactions, continue to encourage and support blockchain technology, and clear ICOs. We hope that this supervision will hit the core: those who use ICO to cheat money. Not to go to blockchain or Bitcoin. Blockchain will be the era of technological revolution and technological application, but no matter how good the tool is, those who use it for bad things will be punished accordingly!