The market capitalization of the crypto market has surged to over $200 billion. This is attracting traders who want quick cash without limiting their options. At this rate, the Initial Coin Offering or ICO space will touch a multi-trillion dollar mark, as per industry analysis. In case you’ve been kicking yourself for not making a move in investing in blockbuster coins like Bitcoin and Ethereum, you should consider an ICO, easily accessible through ICO platforms.
ICOs are a type of digital currency that organizations use to raise capital. Through ICO platforms, financial backers get unique crypto “tokens” in return for their monetary investment for their business. It is a method for crowdfunding via digital tokens to back the development of projects. Current government regulation of ICOs is very minimal, and anyone can launch one if they have the technological resources in place, namely, ICO platforms.
It allows investors to purchase a new cryptocurrency token issued by the relevant company. The token may represent a stake in the company or project, or it may have some utility specific to the product or service the company offers. An example of an ICO would be Ethereum’s ICO that garnered over $18 million back in 2014 within 42 days.
How ICO works
ICOs use unregulated utility tokens or SEC-regulated security tokens for developing blockchain projects. It is an upgraded version of Initial Public Offering or IPO that comes with online crowdfunding for cryptocurrencies.
When any enterprise needs to fund-raise through Initial Coin Offering, they avail the services of an ICO platform. It generally establishes a whitepaper that traces what’s going on with the task, the prospects of the venture, how much fund is required, the number of virtual tokens the authors will keep, what digital currencies are acceptable, and the running time of the ICO. Digital tokens can be traded directly on cryptocurrency exchanges or transferred across the network. ICOs fulfill a variety of purposes, ranging from granting access to certain services to giving dividend rights to the holder.
Initial Coin Offerings are a relatively new concept, hence some investors worry about the value of the tokens and anticipate exploitation. However, volatility is a ubiquitous concern in every nook and corner of financial investment. The market success of ICO’s helping businesses to surpass the million-dollar mark is eminent. ICOs come with a high potential of being more valuable in the future.