Concept of Initial Coin Offering (ICO)

Posted On : 21 Jan 2020
Category : Cryptocurrency

In cryptocurrency trading, initial coin offering (ICO) is equivalent or the same as Initial Public Offering (IPO). It is basically the process of raising funds for any company which wants to create a new coin or launch an ICO. This revolutionizing technique is helping traders trade in crypto coins or tokens which is quite different from the trading process used in IPO. Interested traders can easily buy or exchange the coins with any token or coin on the platform. However, there are chances that the coins generated may have some utilities in using the product or services of the company or may simply represent a stake in its project. Moreover, like IPO, ICO also has some key benefits of its own-

  • ICO listing is mainly used by start-up companies as a fundraising method that is related to cryptocurrencies or blockchain technology. These companies use it to offer their products or services to the traders.
  • Some of the ICOs listed have successfully worked well on the best exchange platforms for the traders, but some were found to be frauds failing to perform well.
  • Being totally unregulated or de-centralized it is quite beneficial for the buyers or sellers. However, it is suggested to be diligent and do a proper research work before going for listing ICOs.

Initially, when anyone wants to earn money by listing ICOs, a white paper is needed to be created which outlines the project requirements. Before running the ICO project or campaign it is important to calculate the amount of money, the number of virtual coins required, check for the currencies that will be accepted, and how long the ICO campaign will run. While the campaign is running, people working on the project may purchase some of the tokens using fiat currency, but it has to match the minimum fund requirements of the firm otherwise the campaign may not run successfully. However, in comparison to IPOs which purely deals with investors, there is a possibility that ICOs can be used to lend in every new project same as a crowdfunding event. Moreover, because of being de-centralized, ICOs are free of any terms and conditions as found with the IPOs.

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