Today, the cryptocurrency market has seen Initial Coin Offerings (ICOs) emerge as a new way of raising funds. ICOs have completely turned how funding for projects is brought about on its head. When an ICO occurs, some newly minted digital tokens are exchanged for established cryptocurrencies such as Bitcoin or Ethereum
With low entry barriers and their democratization of investment opportunities ICOs are very popular. Unlike traditional sources of funding, ICOs offer a new way for the global population to participate in backing innovative projects from before they even get off the ground. Nevertheless, for both investors and project creators it is very necessary to understand the landscape of ICOs.
It is typically preceded by a publication of the whitepaper, which contains goals, technology and tokenomics. For potential investors to judge the possible mutual investments and expected returns in an enterprise, this is designed as a complete framework.
The project's backers buy newly minted tokens with existing cryptocurrencies. Thus does this injection of new money enable the project to build its platform or technology and put it on the market.
Nevertheless, ICOs' wild state has caused fear of fraud and accountability. Therefore the industry has responded and now many different types of fundraising models require a greater degree of transparency from projects, such as Security Token Offerings (STO) or Initial Exchange Offerings (IEO).
There's a long ways come in fund-raising techniques, but when it comes to this binary world of crypto ICO is still quite the appropriate purveyor. Such a funding model demands realism in terms of the number, reflection on oneself and risk.
ICOs are a new way of raising money for projects in general. But it offers international investors a way to back good ideas everywhere. Alternatively, if this way of raising funds is to grow and keep its credibility intact than it must (and can) be competitive under the law.
