ICO stands for Initial Coin Offering, like an IPO, that is, a method for attracting investments for companies that use some blockchain technology resource. The most common is for a company to create and offer tokens (such as shares or cryptocurrencies) for sale on the market and, with that, raise funds.
In order, to understand it, in the best possible way, we can establish that the ICO for levels of understanding, is nothing more than an IPO of the world of cryptocurrencies. However, such similarities end at the beginning of the comparison, where ICO’s standout has become increasingly attractive in the market.
Unlike their “financial cousin”, the ICO’s do not suffer from the regulations in their development, nor with the bureaucratization contained in the IPO’s, making their fundraising for the development of a currency or project much more globalized and accessible. over the network.
There are, however, prerequisites that guide the capacity and safety of these projects, so that they become attractive as a form of investment:
The Whitepaper: This is a financial report with a much deeper explanation of how the project intends to work in practice, because that project makes sense and its logic exists. It may be accompanied by a spending plan with the amounts that will be collected.
The Team and its Managers: They are those people and institutions that endorse the project, that is, that pass on credibility and seriousness, being the figures responsible for its elaboration and structure.
Liquidity: It is extremely important that from the moment the ICO is finalized, the investor is able to redeem what was invested, that is, there is a way to use those tokens, making sense of the reasons for their acquisition.
When ICO projects are launched, there is a collection period, and through this, future investors receive tokens or coins from this project, always proportional to their contributions, which guarantee the return on their investments.
The tokens ensure that the rules contained in the whitepaper, which may or may not be blockchain-registered, establish under what conditions and in what time investment returns will return to the investor.
The endless advantages of ICO’s can be summarized as simple, less costly and innovative fundraising in the financial market, being an option for both startups and companies consolidated with new projects. With a globalized financial ecosystem, which allows its reach to be unlimited, ICO’s are the best solution in terms of design, for those who want more from the future.
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