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ICO – Initial Coin Offerings
The drive to find other ways of raising money for a new company has given “birth” to different experiments. Initially, we used to hear of “Crowdfunding” but more prominent in this year is the rise of Initial Coin Offerings (ICOs).
Founder of a company sells a part of his or her ownership stake, exchanging it for money through a venture capitalist, who trusts that this new ownership will be more profitable in the future than the money spent on buying it. On this pae, you will learn what ICO coins are, how it works, if it is worth trading or not, how many coins have been created, and finally what the famous ICO coins are.
What is ICO?
The term “Initial coin offering” refers to an unregulated or unrestricted method through which funds are sourced for a new cryptocurrency business. It is mostly used by startups to avoid the regulated and rigorous capital raising process that needs banks or venture capitalists.
A certain percentage of the cryptocurrency tokens in an ICO is sold to early funders of the project in exchange for legal tender. Now you got the basis, let us find out how it works.
How does ICO Works?
The concept behind ICO is you creating a token or digital coin and then offering this token or digital coin for sale in an initial offering. You can liken ICO to Initial Public Offering (IPO). It works through the following way.
- A tech startup team generates an ICO through a software platform that enables blockchain like Ethereum.
- The software platform is powered by a cryptography-based software token generally called tokens or coins.
- After this, the team creates a whitepaper where its ideas are described in a technical depth. This whitepaper enables the cryptocurrency community to review the platform, which is ideally backed by a prototype
- The team later crowdfund the coin, which is widely known as initial coin offering or network token presale. This project is hosted in an event, which uses cryptographic tokens with an aspect of its token exchanged for money among a group of developers and early adopters.
Is it good for trading or bad?
Whether it is a good or bad form of trading is based on different factors. However, we will list the pros and cons for you to get a clearer picture if it is worth trading.
Pros of ICO
- There is no need for any paperwork
- Creates opportunities for promising projects.
- It creates exposure for projects
- Early access to potential valuable tokens
- It is an incentive for innovation
- It is an avenue for community building
Cons of ICO
- It is based on speculation
- Brings lots of scammers
- It causes network congestion
- Government intervention is inevitable
- No track record
So what is your take?
Though ICOs are part of cryptocurrency and we cannot overlook the good they have done, it is important for you to be careful because there are scammers everywhere.
How many coins have been created? What are the famous coins?
It is not easy to mention the number of coins created so far. New coins are coming out in the market on a daily basis. Nevertheless, the following are some of the famous coins now in the cryptocurrency community.
- Nxt ICO
- Ethereum ICO
- Lisk ICO
- Waves ICO
- Startis ICO
These are just a few of the hundreds of ICO currently in the cryptocurrency community. To get a complete list of active ICO, pre-ICO, and upcoming ICO, you can find it here.
ICOs will continue to be part of blockchains and cryptocurrency. Therefore, it is important for you to be careful when investing in any ICO. No matter how long it takes, ICOs will be regulated. This could be through government intervention or a self-regulation after the less informed investors have suffered severe loss.
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