What Is An Initial Coin Offering (ICO)?

What Is An ICO and Who Invests In ICO’s?

You have probably heard of an IPO. This is where a firm offers its shares to investors in exchange for cash so that they can fulfill some of their projects. An Initial Coin Offering is something similar to the IPO in the world of Cryptocurrency. In the world of digital currency, startups use an ICO as an unregulated means of raising cash to undertake certain projects. In an Initial Coin Offer, a percentage of the cryptocurrency is sold to supporters of their project in exchange for legal tender or other cryptocurrencies. An ICO, also known as IPCO (Initial Public Coin Offer) must be able to raise the amount required for the said project to be termed successful.

How An ICO Works

An ICO depends on the support of those who believe in the ideas and the future of the stated projects. The Startup has to prepare a whitepaper that explains what they intend to do and how the project will affect the value of the stated cryptocurrency. On the whitepaper, they have to state exactly how much money is needed to carry out the project.

Just like in an IPO, the pioneers will sell virtual tokens while reserving a given percentage for themselves. In an IPO, these tokens are referred to as shares. On the whitepaper, the firm has to state what percentage of the virtual tokens are they retaining for themselves and what type of legal tender or cryptocurrency is accepted.

When the campaign is opened up, the backers of the firm’s ideas and projects will buy virtual tokens not exceeding the state maximum per individual buyer. For an ICO campaign to be successful, the amount raised during the stated campaign period should be able to meet the financial needs of the state project. If the campaign is not able to raise the required amount, it is deemed to have failed. If an ICO fails, the money raised is returned to the supporters of the project. If the cash meets the financial needs of the said project within the necessary time, then ten cash is used to meet the financial needs of the project and the backers of the project obtain a stake in the cryptocurrency firm.

Why Invest In an ICO

Early investors in an ICO are usually speculators. They look at the future and try to predict positive prospects of the given digital currency. While there is no guarantee that the startup will eventually become successful, people always assume that they can make fortune by investing in such a venture. A good example of a successful ICO is the Ethereum project. Ethereum now offers one of the most sought-after cryptocurrencies. In 2014, the firm raised over $18 million in bitcoins during an ICO, where they sold an Ether at $00.40. In 2016 the Ether value went as high as $14. This gave the initial investors great returns, and in 2017 it became one of the top 3 digital currencies on the market. Since the success of the Etherium ICO, more startups in the digital currency market are trying to simulate the same. If you are an investor, you could look out for good ICO opportunities in the market and invest your money in a venture that shows promise.

A Look at Top Cryptocurrencies in 2017

At first, many people were skeptical about cryptocurrency but as the online monetary system grows individuals and companies alike are showing serious interest. Cryptocurrency was modified just recently from cryptography; a process used to transfer information during World War 1. As such, all transfers and purchases are tracked and verified by the internet. Cryptocurrency is especially ideal for most people because it translates to a worldwide currency, which makes transactions easier as opposed to the energy-sapping paper money system.

Here is some of the cryptocurrency currently on the market starting with the pioneer, Bitcoin.

• Bitcoin

Bitcoin was very well advertised a few years ago, and some people accepted this new age form of currency exchange. However, it wasn’t until recently that the value of a single Bitcoin rose exponentially handsomely rewarding those who had put faith in the cryptocurrency at the start of the franchise. Bitcoins are stored in digital wallets, which are almost similar to PayPal regarding money storing and use. However, Bitcoin isn’t as new to cryptocurrency as some of the other forms of online banking on our list seeing it was introduced to the world in 2009. Nonetheless, a programmer using the name Satoshi Nakamoto made sure the real-world market noticed his invention.

• Ethereum

Ethereum is somewhat similar to Bitcoin considering that you can use it to pay for online services and transactions as a developer. Not to mention, both companies share the same digital handprints, Blockchain Technology. However, being an open software, Ethereum gives its users the ability to deploy and build decentralized Apps while Bitcoin only allows the user to transfer cash electronically in the form of Bitcoins.

Still, you can exchange money, property, shares, content, or any valuable item you wish using Ethereum thanks to a unique computer code called smart contract, which also helps in decentralizing specific services and Apps.

• Litecoin

Two tears after Bitcoin hit the limelight (2011), Lee, an MIT graduate, decided to make a cryptocurrency that was more accessible to the general public and called it Litecoin. Of all the cryptocurrency invented after Bitcoin, none has matched or come as close to its annual market worth like Litecoin. People have even gone as far as nicknaming Litecoin the silver version of the golden Bitcoin.

Lee also designed Litecoin to create 84 million units. Now, factoring in that Bitcoin is designed to produce 21 million units which are estimated to be depleted by 2040, this cryptocurrency will enjoy some golden years in the future if its economy keeps scaling.

• Bitcoin Cash

Compared to all the other forms of cryptocurrency discussed above, Bitcoin Cash is the fastest and more straightforward to use. In the beginning, Bitcoin started as a peer-to-peer electronic cash franchise, but that name never lived to its full expectation until the invention of Bitcoin cash. Every Bitcoin holder from block 478558 is also a member of Bitcoin Cash, a movement looking to make sound money accessible across the world.

Bitcoin Cash has included features not found in the original Bitcoin such as on chain scalability, transaction signatures, decentralized development, and emergency difficulty adjustment.

In Closing

Most people are currently developing more forms of cryptocurrency, though the five discussed above remain the best examples. It might be a little late to invest and earn millions using some of the older forms of cryptocurrency such as Bitcoin seeing how expensive they are, but you can also opt for the other options and transfer currency safely online.