There is a rise of a new phenomenon that has gripped the tech world changing the way people can start raising capital for their business start-ups. The new phenomenon is the Initial Coin Offering (ICO) and its shifting people away from crowdsourcing or the IPO (Initial Public Offerings). Here is a guide to take you slowly through the steps of ICO.
What is the Initial Coin Offering (ICO)?
ICO is an investment concept an investor a token or coin in return for his or her investment. The Idea around an ICO or Initial Coin Offering is that you create a digital token or coin, then offer them for sale in an initial offering. It is similar to the Initial Public Offering. Both the ICO and the Initial Public Offering are for raising funds, but ICO gets you a new type of token or coin as an assist and not security. ICO it differs from the issuance of securities from that of an IPO. Once the exchange is successful, the pre-created tokens can be traded or sold on all cryptocurrency exchanges when there is demand for them.
How does an ICO work?
The ICO start with a tech start-up team creating an ICO using a software Platform such as Ethereum. The platform is blockchain-enabled and powered by cryptography-based tokens. The team then produces a white paper description support for a prototype for the community to review. The team crowd funds the projects in cryptographic tokens where a fraction of the token pool is exchanged into currency. The process is known as network token presale to early adopters and the community of developers.
How to select the best an ICO
- Make sure the ICO team has a better product you can use. It’s best if you test the ICO first.
- Check the number of team members and their expertise and experience
- Who are their investors and partners?
- Review investors past investments to understand how successful they are.
- What sort of projects are they involved in now, they were involved in in the past and who advises them?
- Is their product revolutionary?
- Do they have projected timeline that guides each schedule projects and when to be released?
- Did they implement a cap for raising money?
- What is the total coins or tokens to be created?
- How will the money be allocated?
- Do they have a user-friendly interface on the website?
While there are plenty of success stories about ICO, this guide can help you make better investment decisions when it comes to ICO.