It has been everyone’s in mouth in the past some years, and that word is the Cryptocurrency. And even, if anyone does not know the root of this cryptocurrency, then they should know about the Bitcoin or Ethereum. So we discuss here about What is an ICO. To get involved in this cryptocurrency world the primary step is to invest in Initial Coin Offering, which is known as ICO. A pretty easy description What is an ICO
So, do not be late, buddy. Read all our articles, to know more about this ICO world. Moreover, get involved as soon as possible to invest and make some profit to joining with some high potentiality projects.
What is an ICO?
ICO, which is the abbreviation of Initial Coin Offering, is a number of cryptocurrencies, which are being sold in a form of “token” as a legal tender to the investors. Generally, it is a type of funding for cryptocurrencies.
Mostly, it is like the Initial Public Offering (IPO). In IPO, people buy shares from a company to invest. But, in here, they buy token to invest. And the only difference between IPO and ICO is, an IPO you have to sell your properties, but, here one cost only the token price.
Differences between Cryptocurrency Coins and Tokens
It is a difficult part, but the easiest answer is they not same, they contain different terms and definition.
The coin is a currency, which has a value of exchange and can worth something. On the other hand, a token is just a symbol of the contract.
The most import thing here to know is the, no need to create a Blockchain account to buy the token, which is a must in cryptocurrency. But, to issue a token one can use the existing one, such as- Bitcoin, Ethereum or other currencies.
How ICO works?
If you want to run your own cryptocurrency, it will worth a lot. That means you need a lot of money. So, to raise this money you can run an initial coin offering by launching a project. If other people think your project a good one, then they will buy your tokens at a fair price.
When you want to invest in ICO, you must send your Bitcoin, Ethereum or Litecoin to the ICO smart contract. Prices are normally set in Ethereum (ETC). Moreover, some projects accept more than one currencies.
After paying to smart contract, it will send you the amount of token that you have paid for. After end of the ICOsale they listed on the exchange to buy and sell. People can find ICO on the different ICO listing sites.
What is an ICO and ICO Benefits
Obviously, ICO has a lot of benefits for its faster and easier investments. Here they are:
- Much faster and fewer restrictions on investing and raising funds
- No loss of properties and equity in the project
- Price has a huge possibility to increase
- Participating in a new digitized system
- The opportunity to create new decentralized business and market
- Not regulated or governed by government organizations, so that few restrictions and easy to invest
- It is an innovative way to invest capital without political and economic shocks
Everything has its dark side, which means losses or risks. Same happened here:
- Little knowledge about the token holders
- Exaggeration of expected returns
- Uncertain regulation and the unstable investment
- The knowledge and expertise required is underestimated
- Some projects are not developed after end ICO
- Little transparency in the token holding structure
- There have chance manipulated by ICO team
- Incorrect product positioning and misunderstanding of valuation metrics
Avoid all kinds of risks while investing. So, you need to know before invest in Crypto What is an ICO