Have you ever heard the term “Initial Coin Offering” but haven’t delved deeper into the very core of it? Maybe the basics are clear to you, but you are still unsure how it all works and why has ICO gained so much popularity?
First, it is crucial to understand that ICO is an acronym for Initial Coin Offering and is equivalent to IPO, or Initial Public Offering in the crypto industry.
But what does that mean? We will present you with all the essential and basic information about ICO that you should know.
The official definition of Initial Coin Offering is a type of funding using cryptocurrencies. Usually, it represents a specific form of crowdfunding, even though a private ICO which isn’t seeking public investment is also possible.
ICO represents the cryptocurrency’s very first issue to the public. It is usually accompanied by a white paper that describes the technology behind it so that the audience that’s investing may determine its real value. The ICO calendar is an inevitable tool for ICO enthusiasts looking to increase their profits and always be on top of their newest digital currencies.
Let’s say you’re a startup with an exquisite idea for a new cryptosystem. Suppose you intend to streamline the Babysitter payment system that can be encrypted. Let’s imagine it’s called a BabyCoin, shall we?
However, there’s a problem since you’ll need people to give you lots of money for you to make the currency itself. You are allowed to go to a bank, for example. Or you can try getting venture capitalist investors. Nonetheless, you could raise money without giving up any of your ownership of the company. If that’s the case, you should enter Initial Coin Offering.
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Here is how it works. You can create a document where you’ll explain how the system should work. It’s usually called White paper. After that, you need to make a good website and explain why it’s a great idea that could be useful to the world.
Once you do so, you can require people to send you either cryptocurrency money or fiat money. In return, you send them BabyCoin. Keep in mind that they’re hoping that BabyCoin will be in high circulation and used a lot since that will significantly increase the currency’s value.
The main difference between ICO and IPO is that unlike an Initial Public Offering (IPO), if you are investing in ICO, it won’t result in you owning the stake of the company you are giving your money. It’s a gamble that the currently worthless currency you purchase for now will increase in worth some time later, and you’ll be able to make money from it.
If you’re wondering who can launch ICO, the answer is simple. Anyone can launch their own Initial Coin Offering. In America, there is very little regulation on ICOs at the moment. It means that as long as anyone gets a tech set up, he is free to try and get its currency funded. However, be aware of scam ICOs because it is straightforward for fraudsters to set it up as a scam.