ICO stands for Initial Coin Offering and is very similar to the traditional finance “IPO” process. Used for a newly created coin, service or app.
What is an ICO?
An ICO is a way companies start to raise money to create a new currency, app, or service. Persons or organizations interested in making investments can purchase money or services by taking advantage of this offer. With the new money or service provided by the developer company, they may have some benefits.
An ICO is one of the easiest and most effective ways for companies and individuals to raise capital for their projects and for users to invest in projects they consider valuable. ICOs are an event that usually lasts a week or more and where people can buy newly released tokens in exchange for already known cryptocurrencies (Ethereum, Bitcoin, BNB, etc.).
In other words, if the ICO is thought of as a company, investing in a crypto currency that has not yet been a coin will buy shares in that company. If its technology is sufficient, the investor will become rich, as with companies. ICO is a sourcing method used by cryptocurrency creators and is often used to fund the development of cryptocurrencies.
It has been used and useful for many projects. The most striking example of these projects is the fundraising campaign for the Ethereum network in 2014. The ICO eventually increased the value of Ethereum and was profitable for both parties. After Ethereum, ICO campaigns have attracted even more attention.
How Does an ICO Work?
When a company, individual or a cryptocurrency entrepreneur wants to make a fundraising campaign via ICO, they must first analyze the details of the project. It should calculate what the project is about, the amount of funds needed, what kind of money will be accepted, and the duration of the ICO campaign.
Individuals or organizations who want to support the ICO campaign, enthusiasts and supporters of the project buy the network’s cryptocurrencies in exchange for an allowance. The cryptocurrency of the said network is similar to the shares of a company. Also, if an app or service is an ICO, investors are often given shares.
If the money collected for the ICO campaign cannot be collected within the specified period, the campaign is considered unsuccessful. Those who support the project until that time will be refunded. The project is considered successful if the targeted financing requirements are met within the specified period. It is used for the objectives of the project.
ICO Advantages And Disadvantages
The ICO process is easy to initiate, but it is an issue that should be carefully studied by investors. There is no legal guarantee yet. The project and its developers should be carefully researched.
In ICO campaigns, the people or organizations that support the fundraising companies are asked to donate in the token of the project and in return they get new tokens proportionally. According to the progress of the project, this situation can be evaluated as an advantage or a disadvantage.
ICO can have high return potential. This is because investors who support the ICO are generally positive and buy tokens outside of donations. As a result, this causes the corresponding token value to rise.
Successful projects provide income to their developers and investors. In short, it ensures that both parties benefit when a project is successful.
