What is the definition of ICO?
Initial Coin Offering (ICO) is a crowdfunding method used by the new cryptocurrency companies to raise capital. In ICO, some percentages of the newly issued cryptocurrencies are sold to people interested in supporting the project. They are sold to exchange for other established cryptocurrencies such as Bitcoin, Fiat and Ether.
The sponsors buy the new cryptocurrency with the intention of obtaining profits when it increases in value. It is similar to the principle that people make a profit when the amount they buy in the stock market increases in value. ICO is different from buying shares in a stock exchange because it does not get a share of the correct property when it invests in the new tokens.
Brief history about ICOs
In the initial stage, ICO was led by companies such as Mastercoin, Ethereum and Karmacoin. Ethereum led one of the largest ICOs in 2014, raising a total of $ 18 million in the first phase of 2014. They broke the record by raising 3,700 Bitcoins, equivalent to $ 2.3 million in the first 12 hours of the bell. Kik made the first major ICO in September 2017, but the project was interrupted by a phishing scam through the circulation of a fake URL on social networks. Ripple sold $ 1 billion in XRP tokens to investors in exchange for bitcoins and fiats in 2013.
Today, ICO sales have become increasingly popular with around 50 symbolic sales being made every month. As of 2017, ICO has been growing at an accelerated pace with sales of tokens worth at least $ 2 billion made successfully. This shows ICO rating and that it is not going to be a temporary method used by the new cryptocurrency company to raise funds, but it is here to stay for the long term.
Today, the sale of ICO tokens is so popular that at least a few ICOs start every day. It has been predicted that more than $ 4 billion in symbolic sales will be made this year. Genesis Vision, a company based in Russia, conducted an ICO campaign that runs from October 15, 2017 until November 15, 2017. They manage to raise a total of $ 2.3 million in the advance sale of the token.
How does ICO fundraising work?
A cryptocurrency company that wants to obtain capital through ICO must provide some details, including the description of the project, the purpose of the project, the amount to be collected, the percentage of chips that the company will keep, the types of virtual currencies accepted and the calendar of the ICO campaign. Sponsors who are interested can send an email to the seller and request more details of the project before making a transaction. If they manage to increase the amount of the campaign, they will carry out the plan to complete the project. Otherwise, they will return the money to the sponsors.
How do ICO scammers use to commit fraud?
ICO can be carried out to help raise funds for various types of businesses and charities. It has also been used as a tool by scammers to carry out fraud. The scammers would use means to temporarily increase the ICO value and abandon the project later to obtain a quick profit. The scams occur due to the lack of regulation by the government. Like any investment, there is a risk of investing in the initial supply of currencies.
No statistics are given about the company that administers the ICO, so it is difficult to make a prediction. Sponsors usually only verify the data, such as who will receive the money raised and the profile of social networks. To make a successful investment in ICO, one must be patient and be willing to devote time to researching the company.
In conclusion, ICO has helped many new companies raise the funds they need for their projects. With ICO, startups can easily raise a large amount of money in just a few seconds or minutes. Entrepreneurs will continue to take advantage of ICO to raise capital until it is under government regulation.