Initial Coin Offering (ICO) and how it Works

ICO is a means for a company to raise funds to promote or fund a project,  and all interested investors would have the opportunity to buy the offering to receive a new blockchain token has been issued by the company. It’s the abbreviation for Initial Coin Offering and is an incredible tool to support a new blockchain. Therefore, the token received can be traded on the blockchain, in as much as there is enough demand for it.

Brief History of ICOs  

The first token, otherwise ICO was held by Mastercoin and, according to Wikipedia, was in July 2013. Before the mid-year in 2017, almost 20 sites were tracking ICOs, and token sales and ICOs became very popular. In the second quarter of the same year, a web browser known as brave generated almost $36 million in just 30 seconds from its ICO. In the last quarter of the year, ICO had generated more than $2 billion. When the year ended, ICO generated 40 times what was generated in 2016, which shows how it is becoming more popular and booming.

In the early part of 2018, the leading cryptocurrency ICO with over 80% market share is Ethereum. The token accepted was on ethereum standard. Also, the contract power it got eventually lead to the next generation of ICO.

Etherium ICO, a recipe for success

It determines the significant rules for creating well-suited tokens that actualize the ethereum crypto because the system used the ERC2o protocol. Consequently, other entrepreneurs can create or develop their ERC20 suited tokens that can be traded ETH on the ethereum platform.

The decentralized autonomous organization, otherwise known as DAO, that shows a successful use of ethereum smart contract is a stunning example. The organization generated $100 million in ETH, and entrepreneurs interested received DAO tokens that made them eligible to be part of the platform’s governance. It is quite sad that it failed when it was hacked.

Ethereum ICT is one of the latest and fastest-growing generations of crypto-based crowdfunding platform via ICO. It enables and facilitates the investment in other ERC20 tokens, paste, and transfers the contract in your wallet. Then you can use it for any form of trading because it would have appeared in your account.

Note: some blockchains do not have ERC20 tokens that are well suited to the ethereum platform, but almost all blockchain-based framework can go along with the ICO.

The legal status of ICOs

If the founder has a professional lawyer in his team, the entirety of the process will be done without paper because some jurisdictions have not started regulating ICOs. It is worthy of note that token is not a financial asset but can be traded and sold as digital goods.

Although some specific jurisdiction is on the verge of its regulation, such as stocks and bonds, they are aware of ICOs.

Three years ago, the United States Securities and Exchange Commission (SEC) regarded Initial Coin Offering as securities. Consequently, they stopped ICOs they considered it to be misleading for investors.

ICO is also regarded to be the combination of an up to date techniques and conventional methods. Its evolution also makes it easy for many companies and investors to raise funds for their businesses. In a nutshell, the main factor that gave it an edge and made most entrepreneurs and investors interested in it is that it is a risk-free result of technology.

Also, an initial public offering (IPO) is a system that is almost similar to the Initial Coin Offering. For IPO, investors get shares owned by the company while investors purchase the company currencies if the business thrives.

If a document belongs to a particular investor, it will form a web page. Web publication or technical paper. Some falsify their attributes that can be misleading, while others display the accurate info of the project. Therefore, to rely on an electric record or white paper may be detrimental.

Summary

ICO can fund any project related to cryptocurrency, and it is risk-free.