Initial Coin Offerings are a popular fundraising method available today thanks to the advancements in blockchain technology brought by the creation of Ethereum and its ERC-20 standard for tokens which started the whole ICO craze we see today. ICOs are similar to Initial Public Offerings where a starting company sells shares of ownership for new investors to raise capital. The difference rests in what is sold, ICOs offer tokens that will be used in the upcoming company’s services.
ICOs have been frown upon lately, especially with the ban in China a month ago, since they are not regulated. Because of this, scams are a serious threat to investors.
However, ICOs just gained a somewhat unexpected supporter: the United Nations Children’s Fund (UNICEF).
UNICEF has been heavily studying how the blockchain technology (the distributed public ledger used by cryptocurrencies) works. It was evidenced earlier this year when it started accepting Ether donations to its Ethereum address as part of a study on how smart contracts work.
Even more so, back in November of 2016, UNICEF invested in its first blockchain startup, 9Needs, which uses the blockchain to develop identity tools for education in the early childhood.
It was all done with the additional objective of studying the blockchain for the possible implementation of its functions into UNICEF’s operations, according to Chris Fabian, leader of UNICEF’s Office of Innovation Ventures.
Furthermore, stating the possibility of conducting an ICO is a shocking action given the bad reputation this method has gained.
Fabian said that the two main reasons are: first, that the ventures arm of the organisation is run traditionally and thus needs a profitable portfolio; and second, the company’s interest in learning how to use the blockchain themselves.
Since ICOs are done on the Ethereum platform, the company has its eyes on it. UNICEF possesses what is probably the first public Ethereum node within the UN to learn more about the technology and how it functions.
For this, they have Qusai Jouda, their first blockchain lead, who produced a series of classes on blockchain but with a focus on ICOs. The courses are designed with an aim for venture enterprises interested in investing in companies with possible returns in cryptocurrencies. To promote this, UNICEF is building a network of future investment options with blockchain-based firms.
This was evidenced in the aforementioned 9needs investment, and earlier this year, they became one of the founding partners of IXO, a project aimed at making it easier to measure the data that could flow through the blockchain.
Fabian claimed that, if the project works as expected, UNICEF would have a protocol which they could apply to their work “for monetizing some of the collection of data that [they] do”.
Currently, investments made by UNICEF are limited to $100,000. However, they are looking to soon put out a call for blockchain startups and expect to fund up to 10 of them, making it a $1 million investment.