Tuesday, 24 October 2017

Three Basic Questions to Understand ICOs

Posted by Valentine at 11:11 Labels:

No matter if you are only getting started in the world of finances or you have been trading markets for a while now, we are almost certain you have heard about “ICO” a few times.
What is the goal of an ICO?
The acronym ICO stands for Initial Coin Offer. An ICO is a way companies can use to raise money for certain projects. When holding an ICO, a company is offering digital tokens to the public in exchange for funds to meet specific business goals.
An ICO can be compared to a Kickstarter campaign, a popular crowdfunding channel among startups that allows them to fund production of certain products.
One key advantage for companies to choose ICOs over other methods to quickly increase funding it is the speed of the process itself. With an ICO companies can easily bypass the traditional venture capital process.

An ICO typically begins with the creation of a whitepaper that states the aim of the ICO, including a problem, a solution (& product), an explanation of how token works with the product, a description of who integrates the team and a token deployment plan.
Alright… so how an ICO campaign works?
Once the whitepaper is ready, the company will launch its ICO campaign, opening the doors to enthusiasts ready to invest on the firm. In exchange for cash, investors will get coins, also mentioned as tokens. These coins play a similar role to stocks in an Initial Public Offering (IPO).
If the company does not meet the required amount of money to accomplish its goal, all money is returned to investors and the ICO is called unsuccessful. On the other hand, if the firm meets its ICO goals, raising enough money for the project, the scheme is successfully completed.
Why should I feel motivated to invest in an ICO?

Same logic than with stocks. Buy low, sell high. If you invest early enough, you are likely to buy tokens for a rather low price. If the campaign is successful, demand will increase with time, pushing prices to the upside, and so your potential earnings on the purchased cryptocoins.

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