Even Paris Hilton has been caught by the demon of ICOs, a fever which is causing turmoil in the fintech world.
If you are still immune from the ‘crypto-finance’ disease, you need to know that an ICO (Initial Coin Offering) is an anonymous, decentralised, instantaneous and unregulated crowdfunding tool, used mostly by Net-based start-ups to bypass traditional financial providers. It is a lively grey zone that defies regulation, and has exploded in popularity since 2014: experts estimate $2 billion raised in 2017, with tens of new ICOs every month).
By now, the main actors in this world are young nerds or digital trading wiz-types, often resolutely anonymous (many known only by their online nicknames). However, the spread of ICOs has also involved also some international celebrities, who choose to endorse such an ‘exotic’ financial tool.
On 3 September, Paris Hilton announced by Twitter her support for an ICO from LydianCoin Inc. sparking immediate debate, not only among crypto-enthusiasts. The LydianCoin initiative aims to become a new kind of digital currency, allowing access to advanced online marketing and advertising services which are the offspring of the activities of Gravity4 Inc., a high-tech company focused on data management.
Paris Hilton isn’t the first celebrity to promote an ICO. The boxer Floyd Mayweather, for instance, endorsed the financial prediction platform Stox together with the soccer player Luis Suarez. The ICO raised 30 million USD in just one day, last July. Also the US rapper The Game and Jess VerStegg (former Miss Iowa-turned-entrepreneur), are supporting Paragon, a ICO which aims to bring about a tech-revolution in the legalised cannabis industry (the goal is to gather $200 million, beginning 15 September).
Many are puzzled about the usefulness of such endorsements. Maybe an answer lies in the targeting of ICOs on the US market where, in fact, doubts about the reliability of these tools as well as legal restrictions are fuelling the ‘fever’. The involvement of Paris Hilton and other celebrities could be an instrument to legitimise ICOs in the ‘mass market’ by building a positive image that can persuade a cautious public to consider such an unconventional investment vehicle.