What is Initial Coin Offering (ICO)?
Initial Coin Offering is a funding type using cryptocurrency. It is also known as Initial Currency Offering. The cryptocurrency is sold in the form of “tokens” or “coins” to businessman or investors, in exchange for a legal offer or other cryptocurrencies like Bitcoin or Ethereum. The coins sold are represented as functional units for the future of currency when the ICO’s funding goals are met and the project launches. This can be a source of investment for fresh businesses or startup companies. ICOs have been susceptible to scams and securities of law violations. Very few ICOs survive three to four months after the offering, while more than half sold fails. Despite their continues graph of failure and the prices that are falling of cryptocurrency a record of near about seven billion US dollars was funded through ICOs.
Ethereum or Bitcoin is (as of February 2018) the leading blockchain stage for ICOs with more than 80% market share. These blockchain tokens are generally based on the ERC-20 standard. According to Cointelegraph these blockchain token network ICOs have resulted in considerable phishing, and other scams, accounting for about 10% of ICOs.
Advantages of Initial Coin Offering
Here are some benefits or advantages of ICO:
- Simple and effective money raising opportunity. The advertising and commitment settlement expenses are lower of the other mainstream systems utilized.
- They can fortify decentralized applications. Its primary attribute is that the more clients they have, the better their experience is.
- Easy marketing. Here tokens can be advertised to substantial, directed gathering of people with little exertion.
- The auxiliary market implies that ongoing evaluating is based around the present estimation of the venture, in addition to the face that investors have high liquidity.
- Decentralization- These type of currency can be easily accessed through digital mediums.
- Transparency- Contributing early is advantageous, as supporters will, in general, pay less by maintaining a strategic distance from premiums. In order to become the early viewer one needs to get the tickets just after the coin dispatch.
Disadvantages of Initial Coin Offering
Here are some cons on Initial Coin Offering:
- Absence of security token.
- Not a guaranteed process, it is always considered as an unregulated process from both issuers as well as investors end.
- Openness nature towards investors, this creates a situation for people who don’t know about all its consequence to invest in ICO, which create difficulty when there come unsuccessful or fraudulence results of ICO.
ICO listing websites:
There are several websites providing ICO Listings such as listings of Upcoming ICOs, Ongoing ICOs, Pre ICOs, etc. Some of these sites are:
- ICO Bench
- Coin Schedule
- ICO Rating
- ICO Finch
Keep in mind that ICOs are new, which means there are very few regulations. As an investor a person should always be at alert while selecting an ICOs to invest. Always study and consider their ability to deliver on the project on time and on budget.