Whenever a new industry is created, people oppose it in the beginning but gradually start accepting the same and then it becomes a revolution. The same thing happened with the internet and now it is happening with cryptocurrency. One such new vertical is the Initial coin offering (ICO).
ICO is a new vertical and many people believe that it is a fraud scheme devised to scam people and deprive them of their hard earned money. But that is not definitely the case.
What is ICO?
Initial Coin offering (ICO) as the name stands for it is the initial investment needed for starting a new blockchain based venture. It is the unique way of accumulating funds from different investors for developing a new technology and platform.
The new start-ups who set up an ICO distribute their cryptocurrencies to investors in exchange of their investment. This primary investment is seed money for the project which is used in the development, marketing, promotion and maintenance of the POC (proof-of-concept) and the product.
How does the project work?
The projects are DApps or protocols which use a specific cryptocurrency (token).
- Announcing on Bitcoin Talk Forum (News)
The first step in the process is that the cryptocurrency announces itself and makes its presence felt. Vital information about the cryptocurrency like the website, whitepaper, work, development, experience, purpose are all displayed in this step. The main motive is to create hype about the cryptocurrency and making people aware of their proof of concept.
- Getting the ICO stared on the Bitcoin Forum
The next step is announcing the cryptocurrency on the Bitcoin forum and luring early investors in the project. This reflects information regarding the ICO like timelines, the supply of tokens, the proportion of tokens, the amount of tokens used for development, the currency for investors and other necessary information for the investors is shared in this stage.
- Starting the Project
Once the ICO is complete, the actual project starts blooming. The token gets listed in major cryptocurrency exchanges. The investors can trade their tokens and the value of the cryptocurrencies keep fluctuating from this stage onwards.