This fast-paced and ever-changing world always has a lot of new things to offer to consumers. One of the emerging trends is called the ICO, otherwise known as initial coin offering. It is actually an option to raise funds without using venture capital, bank loans, or private equity. It has removed the limit for investment opportunities thus giving more investors a lot of chances to grow their business.
What is an ICO?
An initial coin offering is a funding mechanism that can be used for companies that are accepting cryptocurrencies in place of traditional currency. The ICO, during token crowdsales, will distribute digital tokens to investors who have made a corresponding cryptocurrency investment. These tokens represent the investor's part ownership in the company. Once the token sale ends, these ICO tokens will become available for trading on exchanges. Tokens are very high in value, in fact, making millionaires overnight after the sale.
ICOs and How they Work
It all starts when a team will meet then make proposals that are feasible for a blockchain project. In order for this project to come true, the team has to raise funds using ICO. The project must likewise come with a document that includes the business model as well as the roadmap that will help the team generate income. A prototype will also be made to support the launching of the project.
Intense marketing is needed in order to realize the goals of the project. The team has the option to use Google ads, video blogs, forums, social media and reviews to be able to campaign about the project. This is very important in order to get more people to become excited about the ICO. The project must also specify terms and conditions relating to the upcoming token sale which will be opened to the public.
The document must include the number of tokens which are available for distribution as well as the price and utility of the token. It must also include the amount the team is targeting to raise out of the project. The token sale will then be launched and eventually the coins distributed to investors who will take part in the sale.
Access to ICOs
One of the things you will be concerned about is finding a reliable place where you can take part in ICOs. You have two options in this regard. The first one is through an indirect option where you can buy tokens through exchanges. In case you cannot participate in the crowdsale, you can always look for tokens that are listed on exchanges once the sale is over. The other option is through the ICO crowdsale made via the Ethereum platform. You will need an Ethereum wallet with Ether tokens in them when you opt for this.
What are the Different Types of ICOs?
Initial coin offerings are actually classified depending on the pricing methods used during the crowdsale. One type is where the price increases as more investors become interested with the sale. Another is called the Dutch pricing option where the price of the ICO decreases over time. Some tokens also come in fixed prices while others come in random prices.