The ICO is a rapidly growing business model for financing blockchain projects and now also for companies that have little to do with crypto currencies. Every year, the sums spent on this new type of crowdfunding increase. We from Blockchain-Hero explain the ICO meaning, what the difference is between a crypto currency and a token and what has to be considered in an initial coin offering.
ICO Meaning of the Bitcoin revolution
The term “ICO” is the abbreviation for “Initial Coin Offering”. In German it means: “Erstes Angebot einer Coin”, whereby “Offering” also stands for the IPO or the issue offer. The abbreviation represents a modification of the IPO, the Initial Public Offering, which is the initial public offering of a company. In an IPO, shares of existing shareholders or from a capital increase are offered on a stock exchange for the first time.
What is an https://www.onlinebetrug.net/en/ ICO?
However, the ICO significance has nothing to do with an www.onlinebetrug/en IPO. No company shares are sold on a stock exchange, instead tokens or crypto currencies are offered to interested parties. In some cases, these coins and tokens were developed specifically for crowdfunding and have little or no value. In other cases the crypto currency itself is the focus of the project and the coin offering is the first opportunity to bring the coin into circulation. The sale, often referred to as the “token sale”, is handled via the blockchain, the decentralized peer-to-peer network of crypto currencies. Sales are recorded on the blockchain in a counterfeit-proof manner.
What are ICOs used for?
An ICO crypto currency is primarily used for crowdfunding. In most cases, this finances young blockchain projects. The development team delivers a white paper in which the advantages and technical details of a certain crypto currency or its blockchain are described. This paper makes it available to the crypto community and then holds the Initial Coin Offering within a certain period of time.
Investors have the opportunity to invest early in the offered crypto currency. They speculate that in the course of time the value of the crypto currency will rise and that they will later be able to sell the crypto currency profitably. Others simply want to support the project because they think the idea is good. The offered coin is often exchanged for ether or bit coin. The success of the Initial Coin Offering in Euro or Dollar results from the value of Ether and Bitcoin at the time of the sale.
While blockchain projects mostly financed themselves by means of an initial coin offering, this method of crowdfunding is becoming more and more popular with normal companies. The advantages in comparison to the classical IPO are far less bureaucratic hurdles and fewer regulations. Often it is precisely the large corporations that can afford to strive for the protracted IPO. Since the crypto currencies are not company shares, however, these regulations do not apply to them.
The ICO also makes it possible for small, up-and-coming start-ups to finance themselves. And it can also turn to the community right away. You don’t have to be familiar with stock exchanges to participate in a token sale.
However, there is also a much greater risk from the buyer’s point of view. Several times already sloppy White Papers were provided and by unknown developers times briefly a Coin together-made. Investors caught by the hype about the crypto currency threw themselves on the coin. Then the developers disappeared with your income, the further development of the project failed and the investors remained sitting on a worthless coin. Even if there is no bad intention behind it, there are still many tokens that have little or no use and are still offered. A protection of the investors is hardly ensured.
For this reason, efforts are currently being made to create locations where the ICO crypto currencies are regulated on the one hand and where they remain an attractive crowdfunding model on the other. Switzerland is the leader in this respect. In 2017, four of the 15 largest token sales worldwide came from Switzerland. These four companies generated a total of 631 million dollars. These are the financial technology company Tezos, the online trading centre Bancor, the message service Status and the venture capital company The Dao.