In the trading world, you may have heard about IPO or Initial Public Offering. This is when a company goes public for the first time. As a matter of fact, the same idea can be applied in the cryptocurrency world. There is this term called ICO or Initial Coin Offering. It is pretty much the same as with IPO. When a company is trying to raise money to be able to create a new app, service or coin, they’re launching ICO in an effort to raise funds.
Get a Token
All investors who are interested to the idea may buy in the offering and receive new crypto token that’s issued by the company. The token might have some utility to use either the service or the product that the company offers. Sometimes, it is just representing a stake in the project or company.
Whenever cryptocurrency startups like to raise money via ICO, it normally creates whitepaper where it explains the following:
- Outline of the project’s objective
- The needs that the project has to fulfill upon its completion
- How much fund is actually needed?
- How many virtual tokens will the founders would keep
- What kind of money is accepted and;
- How long the campaign will last?
Throughout the ICO campaign, both supporters and enthusiasts of the project are buying tokens of the project using digital currency or real money. If the money that’s been raised doesn’t meet the required minimum funds by the company, then the money might be returned back to the investors. At such point, the ICO will be considered unsuccessful.
On the other hand, if the funding requirements have been met within the given timeframe, then the money raised will be used in pursuing the project goals.
What’s in it for Investors?
Investors who are planning to buy ICO must have to be familiar with the crypto space first. In case of many ICOs, investors have to buy tokens with the preexisting cryptocurrencies in the market. What this mean is, ICO investors needs to have crypto wallet that is set up for cryptocurrencies like Ethereum or Bitcoin. Additionally, it is important to have a wallet that has the capability of storing any currency or token that they like to buy.
There’s no formula to stay updated of the latest ICOs. This goes for anyone whether you are an established company such as The Property Buying Company or a new investor. The best thing that can be done though is to constantly read about new projects.