ICO

One of the new technological methods of earning funds from potential investors when merging companies want to go public is by giving out/selling shares through an IPO (Initial Public Offering). Here, companies give out ownership or a stake in their company for the infuse of capital into the business. In the regard of this, an Initial Coin Offering is the use of cryptocurrency to fund a business. So in this case, it takes the place of new shares by acting as an equivalent to an IPO during capital source.

ICOs are used as a means of sourcing for funds and capital and can come in different ways. A new company can decide to invent a new coin or token, a new service and open it up for investment through an ICO. The potential investors buy into the offering and pay either through a digital token or a FIAT currency. As an exchange for their investment, the potential investors receive a coin token (cryptocurrency token) specific only to the ICO. The believe of investors who have bought this cryptocurrency token is that the intrinsic value of it will increase exceptionally over a sustained period of time therefore giving a good return for their initial investment in the company. ICOs are used during a crowdfunding procedure for sourcing for capital. ICOs are used to raise money mostly by cryptocurrency startups. In doing this, they create a plan called Road Map which contains the needs of the project on which the funds are been sourced for, then how much money is needed to develop the project. During the process of launching the ICOs, investors purchase with near money otherwise known as virtual currency, although some people also refer to it as tokens which in this case is similar to the shares of a company listed for an IPO transaction. If the amount needed for the project is met, the capital raised for the project is used to develop or initiate a new scheme within a specified timeframe.

Going with the history of Initial coin offering, the very first ICO sale was in 2013. ICO sales became more popular in 2017 as before that mid-year, at least 18 websites used ICOs. By the end of that year, over 40 times as much capital that was raised in 2016 was raised although it was way less than what was raised by the IPOs forming just over 2%. Generally, the ICO is referred to as a stake of ownership interest in a business entity.

 

There have been a few complaints to the invention of the ICO. It was expressed that the ICO is also used for fraudulent activities such as pump and dump schemes and internet scams. Although it is still used for legitimate business like the charitable fundraising, corporate finance transactions, the Security and Exchange commission has informed the general public that scammers now ‘Talk Up” the intrinsic value of ICOs with the aim of generating interest in order to bring up the value of the coins and then, through insider knowledge, sell the coins on a profit. Also, major stakeholders in the investment industry have warned that many ICOs are of a high-risk nature and can be very speculative thereby leading to major scams.

Given the issue of the possibility of crypto been moved from country to country easily without jurisdictional restrictions, central authorities have found it hard to monitor the movement and holdings of cryptocurrency. This has led to countries implementing policies on how best to regulate in the use of crypto in international transactions. With this, there are two types of regulatory crypto which are: utility tokens and assets backed tokens. Utility token allow the holder to exchange it for a service or good in the future such as bitcoin because they hold a considerable value. Asset backed tokens is an underlying asset of which the holder can attribute a value to. In many cases, its is mandatory that the assets backed regulation require permission and regulatory approval before use unlike the utility tokens which do not require regulation in many countries. This makes it hard for the issuers of crypto to analyze and track the countries in which tokens are being sold or bought to.

The ICO is the latest biggest trend In cryptocurrency as it is basically used in a blockchain project which evolves into a successful means of raising funds for the development of a new project.

Going with the projections of crypto experts, the future of ICOs hope to bring even better considerable impact into the technology space as there have been predictions that regulations will be enforced along side a legal ICO framework will be implemented. This will lead to a wide range of unexpected changes. If this legal framework is not implemented quickly, IPOs may take the place of ICOs which would allow for hedge funds to join the crypto World.

Also, if there is an impressive legal framework, the value of the ICOs will pull up and this will result to more profitable ICOs. Our ICO package of ERC20 and ERC721 development have a starting price of 249,000$ and can be completely customized base on your need.