What is ICO?
Initial Coin Offering is simply the fundraising method where projects sell tokens in exchange for bitcoin. If you know more about Initial Public Offering, then it’s much similar to that. Investors prefer purchasing shares from a certain company Although they are very new, this has not hindered them from becoming a dominant point of discussion. For the last couple of years, they have gained a lot of popularity within the blockchain community.
In most cases, numerous people view these projects as unregulated securities. They give freedom to founders such that they can raise an unjustified amount of money. At times, some people claim that it’s an innovation that is quite similar to a traditional venture funding model. Recently, the United States Securities Exchange Commission popularly known as SEC come with a decision regarding the status of the token issued by DAO. Actually, this is the reason why many investors have been reexamining the funding models. Which is the most relevant criteria to consider? You can attest that of all things, passing the Howey test is the most important.
If the test passes, it needs to be treated as a security. In addition, it’s taken as a subject to certain restrictions which are imposed by the SEC. Major technologies such as ERC20 Token Standard make ICO very easy to restructure. With such technologies, you will be in a position to abstract a lot of development process that is necessary to create related assets.
Obviously, all the ICOs work in a way such that the prospective investors send funds to smart contracts. These contracts store the funds and later distribute the equivalent value at a late point in time. There are restrictions on who can participate in an ICO. It is good to know that at this point, you are taking money from worldwide investors. This means that the sum raised is always astronomical. Most of the ICOs raise pre-product money. This has emerged as the most fundamental issue.
In order to incentivize protocol development, you agree on the fundraising style. This is very useful.
History of ICOs
The first attempt to fundraise for a new token was through DAO. The main purpose of this project was to create an independent organization that would later fund other blockchain projects. It was designed such that the governance decisions were unique from the rest. In terms of raising money, DAO was successful. At one time, an unknown attacker robbed the company millions of money.
The executive decided that the best way to recover the huge loses was to work extra hard. It was arguably the best method to achieve the objectives within short time.
Is ICOs Legal?
ICOs have existed in a gray area for quite a long time. Being a super utility token means that the only purpose is to appreciate in value. Why do many people purchase tokens? Tokens boast of the underlying platform at some point in future.
Benefits of ICOs
Do you know the main reason why ICOs have become so popular with many people? While there are very many benefits to contributors, so are to founders. It is these benefits that greatly encourage more contributors to choose ICO Listing site over other options as they invest their money.
Here are the most common benefits.
They are available to anyone and at any time. This will happen especially when they accept cryptocurrencies. You are only required to transfer funds in time so that you can buy.
You can agree with me that lack of liquidity is common to people who are looking for an investment option on their first time. Capital is inaccessible for several months in most situations. But in ICOs you have high liquidity.
Variation in Cost
Token can value greatly from the startup. Besides lowering the risk, it also increases the possibilities of making a profit. In addition, it allows a large number of investors to contribute.
Finding funds through traditional methods is quite difficult at times especially if you lack appeal from your friends. In most cases, this is due to the actual location of the project.
Invest Cryptocurrency profits
Anyone who has cryptocurrency is always hesitant to make use of their wealth. What does this mean? They continue to accumulate in value but people are unable to make use of wealth.