Initial Coin Offering (ICO) is a crowdfunding strategy utilized by new cryptocurrency businesses to raise capitals. Back in ICO, some percentages of the newly issued cryptocurrencies are offered to people that are interested in supporting the project. Ethereum Tokens sold to swap for other based cryptocurrencies like Bitcoin, Fiat and Ether.
Backers purchase the new cryptocurrency with a goal to create a profit when it increases in value. It’s similar to the principle of folks making a profit when the share they purchased in the stock market increases in value. ICO is different than purchasing shares at a stock exchange because you don’t get a share of the ownership right when you purchase the new tokens.
Brief Background on ICOs
Ethereum conducted one of the biggest ICO in 2014 by increasing a total of 18 millions in the early phase of 2014. They violate the record by increasing 3,700 Bitcoins which is equal to $2.3 million dollars over the first 12 hours of this campaign. Kik conducted the initial mainstream ICO in September 2017 but the job was disrupted by a phishing scam via the circulation of a false URL in the social websites.
Today, ICO sales are now increasingly popular with approximately 50 token sales being conducted every month. Starting from 2017, ICO has been growing at a quick pace with $2 billion worth of token sales successfully ran. This demonstrates that it isn’t going to be a temporary method utilized by fresh cryptocurrency business to increase funds but it’s here to stay for extended term.
These days, ICO token sale is so popular at least a few ICO begins every day. It has been predicted that over $4 billion worth of token sales will be conducted this year. Genesis Vision, a Russian based company, conducted an ICO campaign that runs from the 15th October 2017 to the 15th November 2017. They figure out how to raise a total amount of $2.3 million at the token presale.
How Can ICOs Fundraising Work?
A cryptocurrency company that wants to raise capitals through ICO must provide a few details including project description, project purpose, amount need to be increased, percentage of tokens the company will keep, types of virtual currencies approved, and the period of the ICO campaign. Backers that are interested will email the seller and ask for more details of this project before doing a trade. If they raise the amount for the campaign, they will execute the scheme to finish the project. If not, they’ll return the money back to the backers.
ICO can be performed to help raise capital for various types of companies and charity organization. It has also been utilized as an instrument by individuals to conduct frauds. Scammers would utilize ways to increase the ICO value temporarily and abandon the job afterwards to earn a fast profit. Scams happen because of the lack of regulation from the authorities. The same as any investment, there is a risk when coming to invest in the initial coin offering.