ICO (Initial Coin Offering) means the process of issuing cash-based tokens (cryptocurrencies) by some project or company. This is done in order to attract investment. ICO shall be accompanied by the company’s obligation regarding dividends. It can be: · Redemption of part of the implemented cryptocurrency. An obligatory condition for redemption is a fixed price, which is certainly higher than the one on the day of the ICO. · Provision of its services for cryptocurrency at the best price. · Incentives, which will be beneficial from the financial side of investors. In other words, we can say that the company that runs ICO, takes money in debt from the blockchain community. The primary location of the capital unit is somewhat similar to the launch of the project at the crowdfunding service Kickstarter.
How to implement ICO Any successful project or start-up can raise money by ICO. However, it should be remembered that attracting investments directly depends on gaining the trust of members of the blockchain community. The most important aspect is trial and proof of the relevance and “survivability” of the project. In order to be successful, it is necessary to familiarize the community with the business plan, as well as an offer an opportunity to disclose the main idea of the project, acquainting future investors with its team and the main representatives. The very procedure in just the preparation of the ICO alone, takes a lot of time and effort, therefore, start-up companies are offered help by solid companies, which will help them gain trust, draw due attention to the project, and prepare all necessary documentation. Usually, the price of the services by similar companies is about 10% of the estimated amount raised after the ICO.
The profit from ICO Theoretically, you can earn any amount of money on an ICO. For example, to launch a large-scale project, the investment amount usually does not exceed $8 million. The main thing is not to forget that the amount of required investments should always be clearly justified. As in the case of crowdfunding, there is an initial (minimum) amount of investment required to run the project, on an individual one, covering all costs by the organizers. For example, ICO of a new Brave browser developed by Mozilla FireFox hit a record lasting only half a second. During this time, they managed to collect the amount in the Ethereum token, equivalent to $ 35 million. Cash can be withdrawn from specialized authorized organizations located in Singapore, the British Virgin Islands, and Luxembourg. It is in these states that the process is strictly established and the functioning of such mechanisms is established.
Contributions to ICO You can invest your funds in a project on platforms specially developed for this purpose, such as Smith & Crown, ICO Alert, etc. There is a huge number of startups and new projects that need financing. For the investor, the investment process itself is not burdened by unnecessary actions. It resembles a bank transfer. The main conditions are the availability of tokens and the desire to act. How to get tokens In the process of purchasing tokens, specialized online exchangers will help. With their assistance, you can buy them for real money at the current exchange rate. The main condition is the availability of an electronic wallet.
The Risk of Investing in ICO The main problem of ICO is that there is no special mechanism that would legitimately regulate the entire process. Investors who are lending their money can lose everything, as the project can “fail”. It happens that the organizers of the projects are fraudsters or unscrupulous individuals who can later change their obligations for dividends to absolutely unfavorable conditions for the depositor. It should be in mind, that the more information there is available about the project, the more actively it will be discussed by community experts and the better it will be.
It is for those investors who do not want to put their money into risky investment in dubious projects, such as solid companies like AngelList and Protocol Labs have developed a special site Coinlist, where the ICO of various startups and projects are being monitored constantly. Moreover, there is a variety of Internet resources, which host a copious amounts of necessary information, where any active user may Google.
The fact that the Securities and Exchange Commission of the United States (SEC) recently published a warning in an official form addressed to market participants is encouraging. Further elaborating, the SEC informs the US that the ICO will be controlled by the law on operations with securities.