Nowadays, the community of Venture capital has made investments of nearly $1.2bn in Blockchain space. Their inspiration has come from its strong potential, ability to disrupt and the appeal of unique returns, since the land-grab becomes more and more aggressive.
This level of conventional funding does not give any indication of declining; but, the VC community is experiencing disruption by a kind of styling that is not known well outside the community of cryptocurrency. However, it is attaining more traction through ICO (Initial Coin Offering).
Defining ICO (Initial Coin Offering)
An ICO presents a cryptocurrency crowdsale. Normally, a technology team presents a wonderful, novel idea. This is typically a new technology platform founded on Blockchain technology. So as to manage to utilize the newly formed platform, it is necessary to have cryptocurrency tokens.
These are provided at the ICO or bought. The tokens are an indication of the price of transacting on the latest market. This is how funding of Ethereum was carried out to give them the ability to form their smart contract platform. Here, users need to pay ‘Ethers’ as a transaction charge or parts thereof known as ‘Gas.’
These tokens for cryptocurrency are availed for trading as a section of the ICO. They have future value for the ones who want to work with the platform or create concepts for it.
Many times, these shall be technical developers who directly benefit from utilizing the latest platform by managing to create their personal applications, apart from the newly formed platform.
The reason it is simple to do this is that in many instances, the platform code, which is being created by the ones managing the ICO, is open source. So it is readily accessible to the community to assess and improve to their personal specific needs.
Instead of providing an official Information Memorandum or prospectus, a technical white paper represents a lot of ICO’s. These have a lot of similarities in format and structure to conventional academic whitepapers.
These papers indicate to developers the working of the platform, how it shall assist them and how it shall be developed technically utilizing the ICO profits. In case the tech community likes the concepts, they shall make contributions to the project, normally in form of bitcoin that ICOs prefer as a currency. If enough money is collected from selling ICO cryptocurrency, the project takes off.
Why Should ICOs be Used?
ICO offers a wonderful method of launching a project through a team that has a great concept that is normally connected to the blockchain.
It offers the first capital needed to appeal to skilled individuals to work on the project and can offer a lot of funding, similar to a standard seed provided by Silicon Valley project capital funds. A huge difference exists however; it is not necessary to surrender equity after the funds are collected.
Additionally, apart from acquiring some equity-free cash to begin the project, ICO’s can offer a method of checking how interested the wider community is. This is much the same as how pre-sales function for Kickstarter traditional crowdfunding, for instance.
Equally, as ICO projects have the regular open source nature, it is very simple to ‘fork’ them, that is form a clone, which varies from the parent in small ways. So as to gauge whether a market exists for new concepts, an ICO can present a good analysis for market viability, since individuals are voting using their digital wallets.
Which Interesting ICOs Are Happening Right Now?
We really like the CloudWith.me ICO – they are selling tokens right now and have already sold $5,000,000 worth of tokens in just 1 day of pre-sale. Cloud tokens can be bought here: https://token.cloudwith.me/
Guidelines for Investing in ICO
Get information regarding the development team
When you discover an ICO you want to purchase, visit their website and study the developer page. The ICO developers should utilize their genuine name and a photo should accompany that name. Avoid investing in a coin whose developer team is anonymous.
After you discover the identity of the developers, conduct a Google search of their name and get as much information about them as you can. Which schools did they attend? What was their area of study? Where did they work before? Are they experienced in this sector?
A positive indication of a prospective ICO is if the developers connect their GitHub, LinkedIn or Twitter handle on the website of the ICO. Conduct a study on their credentials and previous Twitter posts.
Study the Whitepaper
In case a cryptocurrency company intends to use an ICO to collect cash, it forms a strategy on whitepaper. This is just referred to as the whitepaper. The whitepaper indicates what the project involves, the quantity of coins developers shall retain for themselves and the length of time the ICO campaign shall go on.
If you are totally depending on an ICO, you should always study the whitepaper. The whitepaper shows the risks and opportunities of the company, together with the suggested uses for the cash collected by the ICO.
For instance, the whitepaper shall indicate whether the coin holder shall have voting rights or whether dividends are paid out by the coin. It will also show whether the dividends shall be quarterly, monthly, yearly, or other.
One of the hugest elements to check while studying the whitepaper is a future outlook that is too optimistic as well as vision and objectives.
Finally, aside from the money required to make the project take off following the launch, crowdsales assist the team to maintain cryptocurrency for a longer period. Innovativeness in cryptocurrency space happens quickly because majority of the provided code is open source in nature.
So, in the event that one feature is formed by a team and is found to be useful to the users, it is mainly adapted quickly by other cryptocurrencies.
Spread the risk
Similar to any other prospective investment, you should know how to spread risk. Avoid investing in a single coin, believing it shall increase highly. Get five ICO’s, which you have researched thoroughly, and shortlist the top three.
In summary, projects are assisted by ICOs to maintain the value of cryptocurrencies for the future. If the cash collected is used wisely, this enables the owners of the project to efficiently place themselves well to amass future equity for whatever business they desire to fund.