What Is an ICO and How Does It Work?
ICO has proven to be a revolutionary way for many companies and projects to raise money. ICO can be said as a blend of conventional methods and advanced techniques. The primary thing to consider here is that investors investing in the ICO will be 100% free of risk due to the technology used.
Till now, most of the ICO funds have been collected via Bitcoins (BTC) or Ether (ETH). While performing the ICO, the project produces a Bitcoin or Ethereum address to receive funds and then, shows it on the respective web page. The procedure is the same as opening a bank account, and then showcasing it on a particular web page to people so that they may send money.
An initial coin offering (ICO) is an illegal way to collect crowdfunding via various cryptocurrencies (fiat currencies in a few cases) and is functioned by cryptocurrency organizations to obtain the capital funds required to execute the project. In an ICO, a particular part of the recently issued cryptocurrency is sold to investors in exchange for any legalized tender or any other cryptocurrency. It can be said as a token sale or crowd sale involves taking investment amounts from investors and providing them with some features associated with the project to be launched.
IPO, i.e. Initial Public offering is a process somehow relatable to ICO in which investors receive shares in the ownership of the company. While in ICO, the investors purchase coins of the company that can increase in value if the business gets amplified.
The first token sale, i.e. an ICO was conducted by Mastercoin in July 2013. Ethereum collected money through an ICO in 2014. ICO has taken an entirely new definition in past years. In May 2017, there were approx. 20 offerings, and also a recent web browser Brave’s ICO generated about $35 million in just 30 seconds. Till the end of August 2017, a total of 89 ICO coin sales worth $1.1 billion had been conducted starting from January 2017.
Investors send Bitcoin, Ethereum, or any other cryptocurrency to the given address and then in exchange, they get new tokens that can benefit them greatly if the project gets hit.
- ICO is conducted for cryptocurrency-based projects which rely on decentralized techniques. So naturally, such projects would compel only those investors who have a keen interest in the concept of cryptocurrency and are friendly with the technology used.
- The document that belongs to an investor indeed remains in the form of a webpage, whitepaper, or web post. Some of these documents show exact details about the project, while others fake its features to mislead the interested ones. So before relying on any white paper or e-document, you better go through a quality check.
