The traditional way to attract large capital is to conduct an IPO (initial public offering of shares) – an initial public offering of shares. The company sells its securities through the exchange, thereby making a profit in excess of its annual income. But IPO is a rather elite form of raising funds. The preparation procedure costs the company a round sum and requires a lot of time, up to a year. And there is a high entry threshold for investors as well.
In the cryptocurrency market, by analogy with the term IPO, the concept of ICO (Initial Coin Offering) arose – an additional placement of coins. Companies that decide to raise capital in this way issue digital tokens instead of shares. In the future, tokens can be purchased in the following way: either pay on more favorable terms for services within the platform, or wait for these tokens to rise in price, enter the exchange with them and exchange them for other ico cryptocurrency 2021 or fiat money in this way, make a profit. Choosing the best crypto trading platform is also important.
ICO deals with the release of tokens, then a project conducting such a campaign must work on blockchain technology. Basically, ICOs are launched by fintech startups, whose product itself still exists on paper. You need to think about how to integrate blockchain technology into this particular project. After all, the blockchain was created to make life easier for people. A simple example: a farm can create an internet platform through which products can be purchased on special terms.
The proceeds from the pre-sale of tokens are often invested in the beta version of the product.
Thus, blockchain offers companies to raise investments to implement their ideas in a simple way, without selling a stake in the company. The ICO market is very young and is now in its infancy. However, there are some growth problems associated primarily with the uncertainty.
So, no matter what kind of product you are going to create or have already created a prototype, and you need money to turn it into a marketable commodity, you have the following main tasks, in order of their importance:
- Legal study and follow-up support.
- Marketing aimed primarily at potential investors.
- Development or revision of the product itself.
Why invest in ICO tokens
By buying tokens issued by the project, investors expect:
- Benefit from the resale of tokens at a higher price in the future (assuming that they will be in high demand – for example, because the project will “shoot”).
- Redeem your coupons in the future by receiving (supposedly) services at a lower price.
- Support an interesting fastest blockchain transactions per second project for yourself.
If ICO is another crowdfunding model, how can you be sure that I will not be deceived?
There are absolutely no laws governing the conduct of ICOs – in any country in the world. An ICO on the buyer’s side is a transaction based on trust. As in the case of crowdfunding, the project may not live up to the product launch stage, or, once it appears, it may become a complete disappointment for you. Finally, some enterprising scammers might just trick you into holding an ICO for a project they didn’t intend to develop.
Back in 2016, Nick Tomino, a cryptocurrency enthusiast and head of the Runa Capital office in San Francisco, pointed out in his blog that the behavior of many investors during the ICO was irrational.
