Get to know all the basics of ICO – the Initial Coin Offering.
The cryptocurrency industry’s parallel IPO (initial public offering) is the ICO’s well-known initial coin offering. Its prominent role is when a particular firm is searching for a way to raise money to create a new app, coin, or service as a way of raising funds.
The famous ICO calendar is there to provide helpful information about the initial coin offerings in a table that are active at the moment. Sortable columns are presenting the raising funds, progress toward ICO completion, start and end dates.
A new cryptocurrency token that the company has issued can be given to interested investors who buy into the offering. This specific token that investors receive can be very useful in the product using or service that company has to offer.
Basic explanation of how an ICO works
The whitepaper is created by startups who want to raise money through an initial coin offering. This whitepaper is mandatory since it represents all the information about what that project is about.
It includes information about how much digital tokens the founders will keep for themselves, how much money is needed, the type of money that could be accepted, and most importantly, how long the ICO campaign will run for.
It’s more than evident that supporters of the project and those who are enthusiastic about it can buy some of the project’s tokens with digital currency or fiat. Speaking of these coins, they are similar to shares of a company that has been sold to investors during an initial public offering.
If the money raised doesn’t meet the minimum fund’s requirements, it is likely for money to be returned to the backers. The initial crypto offerings, at this point, would be considered as unsuccessful. Also, if these requirements are met within the timeframe, the money will be used to pursue the goals of that project.
The fundamental difference between ICO and IPO
There are several ways to raise the necessary funds for the expansion and development of certain traditional companies. One particular company is able to start small and grow as its profits are made available. Nevertheless, they have to wait for funds to build up, and it can take time.
The other possibility is that companies may look to outside investors for the early support that will provide them a quick inflow of funds. On the other hand, another method will be going public and earning money from individual investors by selling shares through the initial public offering (IPO).
While the initial public offering deals only with investors, the initial coin offerings may deal with numerous supporters who are more than willing to invest in new projects, like the crowdfunding event.
Keep in mind that ICOs are pretty much different from crowdfunding in that the famous backers of initial coin offerings are motivated by a future return on their investments. On the other hand, the funds that are raised in crowdfunding campaigns are the same as donations.
That’s why initial coin offerings are referred to as “crowdfunding sales.”