An ICO is the shortened form of Initial Coin Offering. It refers to the practice of funding a project or venture by raising money from a large number of people using crypto-currency. This concept is similar to IPO – initial public offering wherein investors purchase shares of a company. ICO is used by startups to avoid market rules and regulations which are followed by Banks.
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ICO can be defined as an unregulated means which allows raising funds for new crypto-currency venture. In ICO campaign, a percentage of the crypto-currency is sold to the early backers of the project for the purpose of exchanging the legal tender or other crypto-currencies.
ICO is a fundraising method that allows trading on future crypto coins for crypto-currencies. It offer immediate, liquid value by selling the percentage of the tokens to the ICO participants and a particular percentage is kept for the company needs by the private investors. It is essential to know that the terms of one ICO differ from the other. ICO allows for big as well as small investment.
It is a digital currency in which “Cryptography” security is used which allows regulating the generation of units of currency while verifying the transfer of funds. It is difficult to make an exact imitation of these types of currency because of the Cryptography security. These are not issued by any Central Authority and these currencies mainly operate on the blockchain, which offers network of records that are linked and secured with cryptography. Bitcoin and Ethereum are some of the most popular and successful crypto-currency. The transactions in these currencies are checked by the “miners” who record the transactions in the blockchain and gives concern towards preventing double entries of crypto-currency.
In the context of Ethereum, it is one of the leading blockchain platforms for ICOs. This network can be used to create tokens. Tokens are distributed on the basis of “smart contracts”. A smart contract is a contract where the terms and conditions are defined and enforced using software. These contracts are generally stored and secured using blockchain technology. When we enter an ICO that uses Ethereum’s blockchain, we will be trading “ether tokens” – under the symbol ETH.
How to Invest in ICO?
To buy into an ICO, there is a need of crypto-currency and a crypto-currency wallet. Since most of the ICO’s are based on Ethereum; we need to set up an Ethereum wallet. The best way of finding out about the upcoming ICO’s is to do our own research and to collect information from the market.
However, there are various websites also available which can offer easy knowledge about the investment. The website like CoinMarketPlus conduct adequate research and based on that research it offers the information regarding best investment.
The main points to be noted when evaluating an ICO investment are:
- ICOs are high-risk way of fundraising.
- We should always remember that due to a lack of regulation, we will have difficulty in getting back our lost money in case of any failures.
- ICOs create new cryptos and there will be infinite winners and losers. It could work out well and sometimes not.
- Not every ICO is the best to invest and it is hard to tell which the best is.
- If we make money on crypto-currency we have to report it as capital gains. We might gain one year and lose the other year, but we have to pay tax on the year we gained.
- Not all ICOs are meant to be investments.
- Crypto-currency wallets are not protected by any regulation. If we lose our wallet or keys, we lose all our coins.
- We should be patient after making an investment. We could either gain or lose from it.
Overall it can be analyzed that investment in ICO is risky. So, now you were thinking that should we invest in it or not? So, here I want to tell you that there are lots of websites online available which can guide you regarding how to invest and where to invest. These websites have the team of experts and they give very good interpretation. Due to this reason, they make investment in ICO easy and offer interpretation of the crypto-currency on the basis of calculation.
There are many factors that influence the chances for successful token sales and the experts of these websites work towards predicting whether it will be valuable for the investors or not. On the basis of their prediction they offer their recommendations to invest. So, before investing in ICO, going through these websites will remain highly supportive to increasing the chances of success.
ICO Participation Process
Opening an Exchange Account
After going a thorough research, you need to open crypto-currency exchange account to convert the domestic fiat currency into popular crypto-currency of Bitcoin (BTC) or Ether (ETH).
Opening our Own Wallets
It is very important to have our own wallets in order to participate in ICO, as it requires to send BTC or ETH from our own wallets.
ICO is a recent phenomenon which allows the investors to exchange crypto-currency for the purpose of stake in early stage. The major reason of attractiveness of ICO in the global market is that rather than having to wait to invest until the company grows large enough and hit the stock market, it allows to invest at the ground floor. To get the high returns, it is essential to take the expert advice as it allows increasing the chances of high returns. Moreover, before investing, you need to read the instructions of ICO initial coin offering in an adequate manner as the terms of one ICO differ from the other. Although investing in ICO is risky but taking the assistance of expert advice remains supportive to gain huge profit and to enjoy great benefit.