BTC Wires: We are fortunate enough to be born in the era where everyone is moving towards a digital future. Initially, we had a digital watch, then photo, digital TV, digital marketing and so on. The world was ready for digital money and Bitcoin was born. So, its’s no surprise that in no time digital
BTC Wires: We are fortunate enough to be born in the era where everyone is moving towards a digital future. Initially, we had a digital watch, then photo, digital TV, digital marketing and so on. The world was ready for digital money and Bitcoin was born. So, its’s no surprise that in no time digital stock joined the party.
ICO(Initial Coin Offering) is pretty much similar to well-established IPO(Initial Public Offering) with two main differences:
- One is not going to own a share in a future company.
2. It should be connected to a blockchain anyhow.
Why A StartUp Will prefer ICO?
The concept is quite new, and the old IPO might be safer, but some of the ICO benefits are unbeatable:
- Retaining Control: one is not sharing their company with an investor, rather, he will sell him a future service. That’s a big difference, one will get the money and will still hold the control on business.
- Globalization: With the help of ICO, one can immediately raise money from anybody from any country worldwide.
- No regulation: This means that there is no bureaucracy which can take months. Tech startup’s success is very much dependent on being first in the market. Otherwise, it will be yesterday’s news and somebody else will take the jackpot.
How does ICO work?
It requires a bunch of guys with an idea somehow connected to a blockchain. For example, a startup will allow you to buy a genetically modified tree and when it grows- it will have a name on its leaves for Bitcoin.
And these group of guys will start a marketing campaign and invite everyone to buy tokens.
So, What is an ICO Token?
It might look pretty much like Monopoly, one buys or sells a thing that doesn’t exist, but somebody wins or loses.
The ICO token signifies one’s contribution to the startup investment. The more money one will give, the more tokens, he will get in return. These tokens will help to buy future company services or just sell tokens.
But why would anyone invest in ICO if he/she will not own a part of a company like in IPO? Which is why they have Smart Contracts.
What is an ICO Smart Contract?
The guys with the weirdest ideas have to promise something worthy to the investors. It can be some percent of the future revenue or say some services free in company service.
The Smart Contract is an agreement between the ICO issuing company and the investor or token holder. For example:- it may read that one offers some percent of the company revenue in return for an investment. Also it can offer the fixed price to sell the token for a specific period even if it’s in a loss.
How Smart Contracts are Created?
The Smart Contracts are developed on the Ethereum platform (the first smart contract was issued by its developer, Vitalik Buterin). There are many more platforms like Confideal, ChainLink, BlockCAT and so on. Each have their own pros and cons.
Reasons Why one Should Invest in ICO tokens?
- One can get some service or benefits according to smart contracts.
- The token’s price can rise quickly, so one can make money buying and selling on time, which is quite similar to the regular stock market.
Some pretty impressive numbers:
- Plutus, a bitcoin easy pay-app whose initial token price was $1.183 on June 2016 while the current price is $15.122, which is about 1,178 percent growth.
- Neo, another cryptocurrency, started with a humble 33 cents per token is now worth $107.
- Daily ROI for Ethereum token holders is 206 percent.
How not to get involved in a scam ICO?
There are good and bad guys everywhere, and in business too. A startup named Condido raised $375000 and then vanished with the money. They went completely off the grid, and no one can find the founders. Well, in older times burglars have to drive to the nearest bank, but now they can do the same without leaving the house.
Here is a “stay away from” list:
- The team is completely anonymous because its based on the decentralised platform and free from regulations. So, before investing try to know about founders at least.
- If the revenue percentage is much higher than the average then there should be a really good reason for it.
- If it’s a serious startup, they will have a solid roadmap at least for the next year. If they are just focusing on big promises rather than their plans on the website of their startup, then think twice before investing.
What is Pre-ICO?
Sometimes a company needs funds for the ICO itself. So, they announce a “sale before sale”. This pre-token sale is much cheaper, which can result in a very good deal in the long run. These sales are very limited and can finish within seconds. So, if one wants to buy in pre-sale, he needs to check upcoming events on a regular basis.
Pre-sale is like low hanging fruit which is not easy to achieve. The popular practice is to run the pre-sale with limited investors, who take a role to change the business angles. So, the money raised during ICO pre-sale can be used to get more money with ICO itself.