ICO has become the new trend in the world of crypto-coins. Joining a project during ICO may be a good start. The idea of presetting crypto coins or a blockchain
token has evolved into a successful tool for raising funds for the development of a new project.
ICO is the abbreviation for Initial Coin Offering. It is equal to an IPO. This means that somebody offers investors some units of a new crypto-currency or a crypto-token in exchange for Bitcoin or Ethereum most of the time. Since 2013, ICOs are often used to finance the development of new crypto-coins, raising capital for the project to become a reality.
With the success of Ethereum
, ICOs are increasingly being used to fund the development of an encryption project by releasing token that is somehow integrated into the project. With this event, the ICO became a tool that could revolutionize not only the currency but the entire financial system. ICO token can become the bonds and stocks of tomorrow.
How they work
ICOs are usually advertised in several crypto medical forums, mainly in Bitcointalk. The ad topic contains important information about the project, such as a whitepaper, project goals, ICO timelines and project development, staff involved, previous team members' experience, notable project features, and other ICO details.
Funds are usually collected in Bitcoin, either through a global public address (in which case participants must send Bitcoin from an address for which they control the private key) or by creating accounts for each participant and providing them with an address Exclusive Bitcoin.
The specific dynamics of an ICO may vary. They usually include a few weeks of earning money at least and may even increase depending on demand. Occasionally, some ICO will limit the maximum amount raised. A small percentage of tokens are usually reserved for rewards, advertising campaigns and even for developers of the currency.
Once ICO is completed and the project is launched, you receive your coins and once an exchange lists you, you can sell, or exchange for other currencies, or simply store them in your wallet.
A small story about ICO
Perhaps the first crypto-tape distributed by an ICO was Ripple. In early 2013, Ripple Labs began developing Ripple's so-called payment system and created about 100 billion XRP tokens. The company sold these token to fund the development of the Ripple platform.
Later in 2013, Mastercoin promised to create a layer on top of Bitcoin to execute smart contracts and use tokens in Bitcoin transactions. The developer sold one million Mastercoin tokens against Bitcoin and received about $ 1 million dollars.
Several other crypto-coins were financed with ICO, for example, Lisk, which sold its coins worth about $ 5 million dollars in early 2016.
The most famous, however, is the Ethereum. In mid-2014 the Ethereum Foundation sold ETH worth 0.0005 Bitcoin each. With this, they received almost $ 20 million dollars, making it one of the largest crowdfunding and serves as the capital base for the development of Ethereum.
As Ethereum itself unleashed the power of smart contracts, it opened the door to a new generation of ICO.