Australian Startup BitCar Burns Tokens After Raising Half Its ICO target

Blockhain Tech
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Australian Startup BitCar Burns Tokens After Raising Half Its ICO target

BitCar, a luxury car startup from Australia, is offering insight into what crypto and blockchain startups should do if they fail to reach their targets, and it involves crypto burns, or getting rid of unsold tokens.

BitCar has been working on a blockchain platform that uses digital currencies as paymen for a stake in luxurious collectible car brands such as Ferrari. The startup launched an Initial Coin Offering (ICO) towards the end of 2017 with the goal of raising $25 million by the beginning of 2018. However, the company ended up only raising $6 million in its Pre-ICO and around $3 million on its public launch.

The founders of BitCar made an unusual announcement after the ICO, stating that they planned to burn the tokens that were not sold in order to improve the value and lower the supply of the sold ones. They also revealed that the raised funds would be used to fund the development of the platform and then bring users on board when it is completed.

The announcement about burning the non-purchased cryptocurrencies could provide an answer towards how blockchain startups should handle their ICOs if they fail to reach their target. Almost half of all the ICOs that were launched last year have failed according to Bitcoin News. This can be quite discouraging to investors especially considering the millions that were invested.

In BitCar’s case, burning the tokens that were not purchased is a strategy that the startup wants to use in order to instantly make the sold tokens more scarce and as a result, more valuable. This is an interesting strategy that might also be appealing to other blockchain startups in the future. In addition, the Australian startup also plans to burn 50 percent of the allocated tokens and the raised amount will still be used to develop the platform.

Meanwhile, ICOs have raised more funds this year than the funds raised by ICOs in 2017. However, the relatively new method of raising funds have been subjected to heavy criticism for the lack of proper regulation, thus resulting in investors losing their hard-earned money.