Today’s post is related to bitcoin and blockchain, which you get to hear or read daily today. As we know bitcoin is a cryptocurrency that works on blockchain technology. There are several ways to bring cryptocurrency into the market through which startups and companies raise capital from the market. This post is about “What is Initial Coin Offering (ICO)?”. Initial coin offering is one of the many ways by which new cryptos are launched in the market.
To get back to the point:-
An Initial Coin Offering is a Cryptocurrency Token pre-Launching Project. It’s like an IPO within the share market. However, the distinction is that IPO is regulated by Authorities companies and ICO is presently not regulated by any authorities or personal companies. ICO is launched by any crypto or blockchain trade firm for Fundraising. Similar to IPO is issued by the corporate to raise funds earlier than approaching the trade.
Now let’s talk more about Initial Coin Offerings:-
ICO additionally works as a medium for any crypto firm to boost cash to create a brand new coin, app, or service. It’s fully unregulated so many fraud and rip-off have occurred. Throughout ICO, you’ll get a token at a really low value. A number of individuals turn into millionaires as a result of buy of the token at the time of ICO, which is additionally a purpose to get trapped in fraud ICO projects. Investors and supporters of the project put money into the project and obtain a brand new Cryptocurrency token issued by the corporate.
How does an Initial Coin Offering work?
When a cryptocurrency startup needs to raise cash by means of ICO, it creates a whitepaper. Then You should purchase a project token with fiat or digital foreign money.
Now Understand What is Whitepaper?
The whitepaper is an overview of the project. It provides the data:-
How much money is needed?
How many of the digital tokens the founders will hold?
What kind of cash will likely be accepted?
How long the ICO marketing campaign will run?
From the Whitepaper, additionally, it is declared that:-
What number of tokens will likely be in Central Financial System, Staff and Advisors, Bounty program, Publish Distribution Phase?
Now more Addons:-
One factor is obvious that it’s an unregulated trade so in case you are investing in ICO, there isn’t any assurance that you simply would not be cheated.
However, earlier than investing in ICO, you will need to read the whitepaper of the project.
I’ll inform you of some factors right here if you happen to discover all these within the whitepaper then you may put money into that challenge. However, I cannot give a guarantee that the project is just not a fraud or rip-off.
- Project developers clearly stated about their targets and their words are easy, whitepaper must be simply comprehensible with clear targets.
- Know the developers.
- Verify legal terms and conditions set for the ICO.
- Ensure that ICO funds are being saved in an escrow pocket. It is a wallet that requires a number of keys with a view to being accessed. That is helpful protection in opposition to scams, notably when an impartial third-social party is a holder of one of many keys.
Primarily Initial Coin Offerings have three phases:-
- Pre-Distribution Part
- Distribution Part
- Trade Part
I’m sharing a website that gives ICO options for the corporate and additionally offering a software program.
Cryptocurrency, and ICOs in particular, have been popular with some entrepreneurs, investors, and speculators in recent years. There are currently dozens of different cryptocurrencies, with new ones popping up all the time, including Bitcoin Cash, Ethereum, Dash, and Monero.
There have been hundreds of ICOs, which are often promoted on the basis of relatively low fees and high returns. Many of those, however, have failed to deliver on those promises.
In the end, I would like to say that only invest in ICO of branded and valued companies like Diem, a project launched by Facebook.
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