Initial coin offering (ICO) is a method used to raise capital in the cryptocurrency environment. An ICO can be viewed as an initial public offering (IPO) that uses cryptocurrencies. These crowdsales of new cryptocurrencies allow companies to raise funds from the general public, and token buyers receive something close to equity in the network, as the price of shares should rise as the platform grows in popularity. With very little ICO regulation in the United States today, anyone with access to the required technology is free to start a new cryptocurrency.
Tanushree Pathak
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Initial coin offering (ICO) is a method used to raise capital in the cryptocurrency environment. An ICO can be viewed as an initial public offering (IPO) used for cryptocurrencies.
Like digital crowdfunding, ICOs allow startups to not only raise capital without generating equity, but also build a community of incentive users who want the project to succeed so that the value of presale tokens will increase.
How Initial Coin Offering (ICO) Works
When a cryptocurrency startup seeks to raise funds through an initial coin offering (ICO), the first step is to determine how the project will be structured. ICOs can be configured in a variety of ways, including:
Static supply and static price: The company can specify a defined financial goal or limit, meaning the price of each token sold in the ICO is determined, and the overall token supply remains constant.
Static supply and dynamic pricing: An ICO can have a fixed dynamic funding objective and a supply of tokens, which indicates that the ultimate price of each token is determined by the amount of money collected in the ICO.
Dynamic supply and static price: Some ICOs have a dynamic supply of tokens, but the price is fixed, meaning that the supply is determined by the amount of money collected.
The initial coin offering, or ICO, has raised money rapidly for new types of investments, and generally for early -stage project developers.
These crowdsales of new cryptocurrencies allow companies to raise funds from the general public, and token buyers receive something close to equity in the network, as the price of shares should rise as the platform grows in popularity.
Early -stage blockchain companies have been making more money through ICOs than venture capital this year, and VCs are starting to annoy themselves by signaling their own fundraising rounds, noticing the writing on the wall.
But many of the questions posed by this method of crowdfunding, begin with: Are tokens sold through ICO security?
Furthermore, the ease with which large amounts of money can be collected based on white papers containing the words “blockchain” or “tokens” has led to a number of scams and unsuspecting projects have generated more money than they would otherwise have. business.
Along with the ICO structure, crypto projects typically create a white paper, which is available to potential investors through a new website dedicated to the token. The project promoter used the white paper to explain important information about the ICO:
- What the job entails
- The requirements on which the project will be completed upon completion
- How much money is needed for the project?
- How many virtual tokens will the founders store?
- What form of payment (currency) will you accept?
- How long will the ICO campaign last?
The white paper was released as part of the project’s ICO campaign, which was intended to encourage project fans and supporters to purchase some of the project’s tokens.
To buy new tokens, investors can generally use fiat or digital currency, and it is becoming more common for investors to pay with other forms of cryptocurrency such as Bitcoin or Ethereum. These newly issued tokens are equivalent to shares of stock sold to investors during an initial public offering (IPO).
If the money collected in the ICO is less than the minimum amount required by the ICO criteria, the money can be returned to the project investor in full. The ICO will then be considered a failure. If the funding requirements have been met within the stipulated time, the funds raised will be used to achieve the objectives of the project.
Who is Eligible to Launch an ICO?
The ICO can be launched by anyone. With very little ICO regulation in the United States today, anyone with access to the required technology is free to start a new cryptocurrency.
However, the lack of regulation means people can do anything to convince people that they have a legitimate ICO — and then lose it with their money.
ICOs may be one of the easiest ways to set up fraud among all funding methods.
Well-known actors and entertainers, such as Steven Seagal, will occasionally encourage fans to invest in a hot new ICO.
Floyd Mayweather Jr., a boxing champion, and DJ Khaled, a music mogul, both promoted Centra Tech, an ICO that generated $ 30 million at the end of 2017.
Centra Tech was eventually convicted of fraud in court, possibly prompting the two celebrities to settle charges with U.S. regulators and the 3 founders of Centra Tech pleading guilty to ICO fraud.
Although someone can create and launch an ICO, not everyone should. If you are considering managing an initial coin offering, consider whether your company will benefit significantly from an ICO.
Companies like LCX, Coinlist, and Tokensoft have a reputation when it comes to token sales.
I would recommend LCX personally because they recently held a successful sale of $ DGMV Tokens, which are tokens from Digicorp Labs and now you will see the sale of $ VIS Tokens on LCX.
But yes, I also recommend that you do your own research and check out other options available in the market such as:
- List of coins
- Tokensoft
- Indiegogo
- ICO Engine
- LCX
We know what an ICO is, how it works, and who can launch it but we also need to know what the advantages and disadvantages are, right?
Online services can help create cryptocurrency tokens, making it very easy for businesses to consider launching an ICO.
The ICO manager generates the tokens in accordance with the ICO requirements, eventually receives them, and then gives the tokens to individual investors by transferring the coins.
However, because the ICO is not regulated by a financial institution such as the SEC, funds lost due to fraud or ineptness cannot be recovered.
Early investors in ICOs are usually motivated by the assumption that tokens will appreciate in value when the cryptocurrency is launched. Very high yield potential is the main advantage of ICO.
So it’s all about the ICO and the company you should choose to start your first token. Hopefully this can be useful and I will be able to see you more interesting and knowledgeable about technology, AI, and of course crypto.
