ICO or also called as initial coin offering is a medium or mode of trading or exchange of certain cryptocurrencies especially of liquid value for certain future cryptocoins. The main motto behind introducing ICO is to raise fund to establish a new cryptocurrency system or project. ICOs are usually done by a project’s developers and supporters to reciprocally gain from it especially by regulating and distributing initial coin or ICO supply.
ICO normally takes place especially in the early levels of a project. Basically, ICO’s are launched with the thought to pre-sell crypto coins or tokens to interested investors in order to raise fund for new projects. For this, a whitepaper is officially presented by a business owner describing the business model and technical specifications of a project. A certain period is established and coin supply and target funds are determined. At the stage of crowd funding, new tokens may be bought with existing cryptocurrencies such as blockchain and ethereum.
If you want to introduce a successful ICO, you need to follow stated below points.
First you need to create a new cryptocurrency especially on a protocol like counterparty, Ethereum, and openledger.
Moreover, an arbitrary value could be assigned by a team especially based on the existing worth of a network.
You need to determine the price dynamics especially based on current market supply and demand. Moreover, token dividing can be done on the basis of particular individual investment of an individual i.e. more tokens can be allotted to an individual who has invested lots of fund.
You also need to create more awareness regarding the new cryptocurrency. You need to encourage participants so that you can reach at a point when the real price surpasses the existing ICO price.
Undermined ICO Price – In this type of ICOs, primarily the developer could not sell the tokens thus allowing investors to grab new tokens especially based of their certain investment. The best part of choosing this type of ICOs is that they come with 100% ownership.
ICO with Fixed Price – In such an option, the developer may fix a certain exchange rate or price of a new token. Thus, this type of arrangement simply enables various token purchases at a certain price tag. Here one point should be noted that ICOs with fixed price are normally accompanied by a certain freezing time frame, which is a kind of lock period thus investors aren’t able to trade or sell their tokens. Post the certain freezing time frame, investors could be free to list as well as trade their specific tokens.
Dutch auction – In this type of ICOs, token sale begins with the greatest price. But the token price may decrease thoroughly till the end of last token sold.
The easiest answer to this most asked and discussed question is a big no. yes, there is no difference between ICOs and IPOs/ crowd funding. Just like IPOs, in ICOs the official tokens are provided to raise money in a predefined time period. Moreover, the tokens when bought could be traded or exchanged on publically available exchanges.
It is a fact that ICOs are just like popular crowd-funding option. Initially, they were called as crowd sales. Obviously, they are used to raise money for projects. Again like crowd funding, investors can also be able to trade tokens.
Since there is much risk involve in buying or investing into ICOs, investors must want to make an informed decision. If you don’t want to repent on your decision, you should take stated below points into consideration while choosing a right ICO.