ERC-20 Co-Author Aims to Eradicate Fraudulent Tokens with New ICO Model

Many Blockchain and cryptocurrency startups have successfully funded their initiatives with the help of initial coin offerings (ICOs). They have also brought in investors to decentralized applications. However, ICOs have also produced and attracted criminal minds. The Ethereum-based ERC-20 token format is one of the first and most common standards for ICO tokens. Now, one of the standard’s co-author is recommending a number of changes in order to eradicate scams and other fraudulent activities.

During the annual assembly of Ethereum developers known as the Devcon Conference held in Prague, Fabian Vogelsteller has proposed that these changes are expected to protect investors from scams. Vogelsteller states that the new standard will give investors the power to refund their ICO investments at any level of progress the project makes.

Dubbed as Reversible ICO (RICO), it forces a smart contract to let investors exchange their “already purchased” tokens back to other digital currencies any time. He says that the process is expected to work without any glitch, explaining that “you are able to take your funds back at any point in time and do it simply by sending your tokens back.”

While ICOs have served as the foundation for numerous new Blockchain projects, the industry sees a gradual decline due to low investor confidence. Vogelsteller claims that his proposal will help bring back investor confidence as well as urge token issuers to fulfill their end of the deal. If implemented, the standard has the potential to bring more investments and overhaul the cryptocurrency and Blockchain project funding system, which presently appears to be on the downtrend. The standard is also expected to reduce the risk for individuals who plan on participating in new ICOs.

Despite its potential though, the new standard also has a downside to it. Startups who are hosting ICOs may not be able to immediately use the funds raised since investors can easily withdraw their support any time they choose to. This goes to show that startups need to look for other private or institutional funding means for their projects in case investors suddenly decide to withdraw their investment.

Vogelsteller is also the lead developer of Mist, a decentralized application browser. With his reputation in the Ethereum community, his recommendation is sure to garner a lot of attention and consideration.