ICO is the abbreviation of Initial Coin Offering. It means that someone offers investors some units of a new cryptocurrency or crypto-token in exchange against cryptocurrencies like Bitcoin or Ethereum. Since 2013 ICOs are often used to fund the development of new cryptocurrencies. The pre-created token can be easily sold and traded on all cryptocurrency exchanges if there is demand for them. An unregulated means by which funds are raised for a new cryptocurrency venture. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks.
In an ICO, there can be a specific goal or limit for project funding, meaning that every token will have a pre-designated price that will not change during the Initial Coin Offering period, which also means that the token supply is static.
It is also possible to have a static supply with a dynamic funding goal, in which the distribution of tokens will be made according to the funds received, meaning that the more funds the project receives the higher the token price will be.
How Does ICO Work?
From a creator’s perspective, a service or application is to be built based on blockchain technology with protocol, set of rules and white paper being established. Afterwards, the creators will bring forward the white paper, which will illustrate the details of the project e.g. project idea and mechanism, implementation schedule, capital required etc; and arrange token pre-sale, sale, marketing and listing through various communication means and private exchanges.
ICO will be opened for a fixed amount of token sales within a certain period, which usually varies from a few weeks to a month. Some may open for various rounds of token sales with limited amount of token to be sold during each phrase. Furthermore, some ICO may offer pre-sale for privileged or selected investors at a discount before the actual sales date. In general, the token issuers will be transparent regarding the token mechanism and token allocation, which will usually state in the white paper.
Upcoming ICO's
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