The Godfather of Ethereum ICOs Wants to Let Investors Take Their Money Back

The developer that formalized the code underlying most initial coin offerings - ethereum's ERC-20 token standard - has proposed a new approach in a bid to make the funding schemes more safe for would-be investors.

Speaking in Prague on Tuesday at Devcon4, ethereum's annual developer conference, developer Fabian Vogelsteller proposed a "Reversible ICO," or RICO, that would allow token investors to take back their funds at any stage in that project's lifespan.

Specifically, the concept involves the creation of a special-purpose smart contract that allows investors to "Reverse their funding commitment."

"You are able to withdraw the funds you committed at any point of time and you do this by simply sending back your tokens," Vogelsteller told the audience.

Once ether has been refunded, other investors can buy in, Vogelsteller continued.

Because this is likely to lead to fluctuation in the value underlying a project, Vogelsteller said the startups will need some "Base funding" from private investors outside of the ICO as well.

According to Vogelsteller, the methods "Makes scams unlikely." Because investors can withdraw funds at any time, ICO startups are more directly incentivized to commit to their promises.

It "Allows projects to fail naturally" without the risk of token investors losing funds as the project collapses.

ICOs have increased in popularity in the past two years, attracting over $20 billion in accumulative funding, according to the CoinDesk ICO Tracker.

Intended to be a more usable orientation of founder of ethereum Vitalik Buterin's own attempt toward a safer ICO scheme, the first step for RICO is to test the code in the wild.