News What is an ICO and How Does it Work? 2022
ICOs have proven to be a revolutionary way for many companies and projects to raise money. ICOs can be said to be a blend of conventional methods and advanced techniques. The main thing to consider here is that investors investing in the ICO will be 100% risk free due to the technology used.
To date, most ICO funds have been raised via Bitcoin (BTC) or Ether (ETH). When conducting an ICO, the project generates a Bitcoin or Ethereum address to receive the funds and then, shows it on the respective web page. The procedure is the same as opening a bank account, and then displaying it on a specific web page to people so they can send money.
Initial coin offerings (ICOs) are basically an illegal way to raise crowdfunding through various cryptocurrencies (fiat currency in some cases) and function by cryptocurrency organizations to get the capital funds needed to run the project. In an ICO, a certain part of the recently issued cryptocurrency is sold to investors in exchange for a legalized tender or other cryptocurrency. It can be said as token sale or mass sale which involves taking investment amount from investors and providing them with some features related to the project to be launched.
IPO, i.e. Initial Public Offering is a process somehow related to ICO in which investors receive shares in the ownership of the company. While in an ICO, investors buy the company’s coins which can increase in value if the business is strengthened.
The first token sale, namely an ICO was conducted by Mastercoin in July 2013. Ethereum raised money through an ICO in 2014. ICO has taken on a whole new definition in recent years. As of May 2017, there were approx. 20 offers, as well as the ICO of Brave’s newest web browser, which raised around $35 million in just 30 seconds. As of the end of August 2017, a total of 89 ICO coin sales worth $1.1 billion had been made as of January 2017.
Investors send Bitcoin, Ethereum or any other crypto currency to the given address and in return, they get new tokens which can greatly benefit them if the project is successful.
- ICOs are basically done for cryptocurrency-based projects that rely on decentralized techniques. So of course such a project will only force investors who have an interest in the concept of cryptocurrency and are friendly with the technology used.
- Documents belonging to investors do remain in the form of web pages, whitepapers, or web posts. Some of these documents show exact details about the project, whether some actually fake its features to mislead interested people. So before relying on white papers or electronic documents, it is better to go through a quality check.
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