What’s the Definition of ICO?
Initial Coin Offering (ICO) is a crowdfunding method used by new cryptocurrency companies to increase capitals. In ICO, some proportions of those recently issued cryptocurrencies are offered to people that are interested in supporting the project. They are offered to swap for other established cryptocurrencies like Bitcoin, Fiat and Ether.
Backers buy the new cryptocurrency with an intention to make a profit when it increases in value. It is similar to the principle of people making a profit when the share they bought at the stock exchange increases in value. ICO is different than buying shares at a stock exchange cause you don’t receive a share of the possession right when you purchase the new tokens.
Brief Background on ICOs
Ethereum conducted among the largest ICO in 2014 by raising a total of 18 millions in the early phase of 2014. They break the record by increasing 3,700 Bitcoins which is equivalent to $2.3 million dollars over the first 12 hours of the campaign. Kik ran the first Egyptian ICO in September 2017 however, the job was interrupted by a phishing scam through the flow of a fictitious URL from the social media.
Today, ICO earnings have become increasingly popular with around 50 token earnings being conducted every month. Starting from 2017, ICO has been growing at a fast pace with $2 billion value of token sales successfully conducted. This proves it is not going to be a temporary method utilized by new cryptocurrency business to increase funds but it’s here to stay for long term.
These days, ICO token sale is so popular that at least a couple ICO begins every day. It’s been predicted that more than $4 billion value of token sales will be conducted this past year. Genesis Vision, a Russian based company, conducted an ICO effort that runs from the 15th October 2017 into the 15th November 2017. They manage to raise a total of $2.3 million at the market presale.
How Does ICOs Fundraising Work?
A cryptocurrency company which wishes to raise capitals via ICO must offer a couple of details including job description, project purpose, amount need to be increased, percentage of tokens the corporation will keep, types of virtual currencies approved, and the period of this ICO campaign. Backers who are interested can email the seller and ask for more details of the job before performing a trade. If Ethereum Tokens raise the sum for the effort, they will carry out the scheme to complete the project. Otherwise, they will return the money back to the backers.
How Scammers Use ICO to Take Out Fraud?
ICO can be performed to help raise funds for various kinds of companies and charity organization. It has also been used as an instrument by scammers to conduct frauds. Scammers would utilize ways to grow the ICO value temporarily and abandon the project afterwards to make a quick profit. Scams happen cause of the lack of regulation from the authorities. Just like any investment, there’s a danger when coming to invest in the first coin offering.
What’s the Definition of ICO?