What’s the Definition of ICO?
First Coin Offering (ICO) is a crowdfunding strategy used by fresh cryptocurrency businesses to raise capitals. Back in ICO, some percentages of the recently issued cryptocurrencies are offered to folks who are interested in supporting the project. They are sold to exchange for other based cryptocurrencies like Bitcoin, Fiat and Ether.
Backers buy the new cryptocurrency with an intention to make a profit when it increases in value. It’s comparable to the principle of people making a profit once the share they bought at the stock exchange increases in value. ICO is different than buying shares at a stock market cause you don’t receive a share of the ownership right when you purchase the new tokens.
Brief History on ICOs
At the beginning point, ICO was conducted by companies like Mastercoin, Ethereum and Karmacoin. Ethereum conducted one of the biggest ICO in 2014 by raising a total of $18 millions in the early phase of 2014. They break the record by raising 3,700 Bitcoins that’s equal to $2.3 million dollars over the first 12 hours of this campaign. Kik conducted the initial Egyptian ICO in September 2017 but the project was disrupted by a phishing scam via the flow of a false URL from the social websites. Ripple sold $1 billion value of XRP tokens to investors in exchange for bitcoins and fiats in 2013.
Now, ICO earnings have become increasingly more popular with around 50 token sales being conducted every month. Starting from 2017, ICO has been growing at a fast pace with $2 billion worth of nominal earnings successfully ran. This demonstrates it is not likely to be a temporary method used by fresh cryptocurrency business to increase funds but it is here to stay for long term.
Nowadays, ICO token sale is so popular at least a few ICO begins every day. It has been predicted that over $4 billion value of token sales will be conducted this past year. Genesis Vision, a Russian based firm, conducted an ICO effort that runs from the 15th October 2017 to the 15th November 2017. They manage to raise a total amount of $2.3 million in the token presale.
How Can ICOs Fundraising Work?
A cryptocurrency firm that wants to increase capitals via ICO must offer a couple of details including job description, project purpose, amount need to be increased, percentage of tokens the corporation will maintain, types of virtual currencies approved, and the timeframe of the ICO campaign. Backers who are interested will email the vendor and ask for more details of the job before performing a trade. If they increase the sum for your campaign, they will execute the strategy to complete the undertaking. If not, they’ll return the money back into the backers.
How Scammers Use ICO to Carry Out Fraud?
ICO can be conducted to help raise funds for a variety of types of businesses and charity organization. It has also been used as an instrument by individuals to conduct frauds. Scammers would utilize ways to increase the ICO value briefly and leave the job afterwards to make a quick profit. Scams happen cause of the lack of regulation from the authorities. The same as any investment, there’s a danger when coming to put money into the first coin offering.
What’s the Definition of ICO?