Initial Coin Offering

Initial Coin Offering

Introduction to Initial Coin Offering (ICO) and Its Role in Crypto Trading

The Initial Coin Offering (ICO) is the beginning of the adventure of a digital currency. This may seem like a simple process, the importance of usurping the project goes beyond its apparent meaning. Successful initial launch of a project can be a solid foundation for a cryptocurrency and blockchain project.

Initial Coin Offering

What is Initial Coin Offerings (ICO)?

Projects and businesses raise their capital by selling their tokens in exchange for cash or cryptocurrency by this process. Since these companies are not regulators, they can quickly raise significant capital without going through the rigors of conventional lenders such as banks.

Initial offerings give investors the opportunity to participate in large cryptocurrency projects and earn acceptable profits if the cryptocurrency value of the project increases. If a project uses the Proof of Stock (PoS) protocol as its consensus mechanism, it can be rewarded simply by sticking to it.

History and evolution of the ICO

Master Coin made the first initial public offering in 2013, during which approximately $600,000 was raised to advance the project of building an exchange and bitcoin-trading platform. While Bitcoin was a leader in cryptocurrencies, it became the first decentralized digital currency in 2009, and other cryptocurrencies known as Altcoins had just entered the market.

Turning to newer methods instead of attracting venture capitalists to raise capital has been a great success for the cryptocurrency market, the number of initial public offerings continues to grow, and the liquidity associated with initial public offerings compared to the liquidity of venture capitalists has taken them by surprise.

How ICOs work

Unlike centralized electronic money/banking systems, cryptocurrencies are decentralized. Early Bitcoin and Altcoins entered the market without initial public offering due to the nascent cryptocurrency market, but governments and central banks have been relatively slow to establish a formal legal framework for cryptocurrencies and subsequent initial public offerings.

As venture capitalists acted out of fear of being left out of major fundraising events, news broke in April of this year about the first underwriter of Coin’s initial public offering.

First Bitcoin Capital firm considers itself an observer, in a committed role, carefully identifies good projects from bad ones, and contributes to the long-term success of the market.

There is still a long way to go in the market, and unless there is a coherent framework recognized by governments and regulators, it is possible that investors will not be able to enter the field with confidence.

Even in Mondaf’s Panzi scheme, in which investors lost billions of dollars, part of the capital was returned to its owners, but in the case of initial public offerings, there is no legal entity that the investor can turn to, let alone Complain about this project.

In terms of initial public offering figures, they have raised $327 million to date through fundraising. That figure was $295 million for venture capitalists, including blockchain startups. With the increase in the number of initial public offerings, venture capitalists fell behind in investment for the first time this year.

Following the initial public offering of Mr. Coin, it is estimated that the initial public offering in 2014 raised as little as $25 million, which fell to $10 million the following year following the fall in the price of Bitcoin in 2014. However, in 2016, the trend was reversed and initial public offerings are estimated to have raised $225 million thanks to the rise in the price of bitcoin. These changes brought more attention to blockchain and financial technology.

There have been many stories about the success of the initial release so far; meanwhile, in the second quarter of last year, an Ethereum-based project called the DAO to launch an investment fund without the need for a fund manager entered the initial public offering of a particular coin, in which investors participated in all investment decisions.

During this initial public offering, approximately US $150 million, approximately 70% of the total capital raised through the initial public offering in 2016, was raised. By mid-2016, hackers were able to steal more than $40 million from the DAO project. As a result, the project suffered a fatal blow, and the price of ether fell sharply from $19 to less than $12 in a short period.

In order to maintain its market capitalization and support investors, Ethereum created a new blockchain and separated from the original Ethereum blockchain, now known as Classic Ethereum, which has fewer fans.

Despite the inherent dangers of the cryptocurrency world, which in addition to the risk of being hacked also poses a threat to fraudsters, 2017 was a very bright year for the cryptocurrency world, and there was a significant increase in the initial public offering of stocks and the capital raised in these events.

The concepts that define the initial public offering are becoming more and more innovative and the rate of capital raising is increasing day by day. However, in the absence of oversight by institutions such as the stock exchange, adverse events may occur for investors in this field.

What are the characteristics of Initial Coin Offerings?

Key features are as follows:

1. Participate in a project called the Decentralized Independent Organization (DAO) or an economy.
2. In the initial public offering of a coin, the right to participate in the economy is generally sold, while in the initial public offering of the token, the ownership or royalty is sold to a project or DAO.
3. Owning tokens does not always give the investor the right to vote on project or DAO decisions, although his rights are included in the initial public offering structure; yet in general, the investor will participate in it during the project.
4. Most promotions include creating a certain number of coins or tokens before selling.
5. The builders of the economy, project or DAO usually set the initial offering price.
6. The initial public offering may include several rounds of raising capital and the value of the coins or tokens offered to increase the release date; In this case, the initial investors will probably receive more rewards from their purchase.
7. Initial offerings expire when coins or tokens can be traded on the open market.

Decentralized Independent Organization

How to find a valid Initial Coin Offering?

To invest in initial public offering tokens, the first step is to choose the right initial coin offering, this is not easy because there are so many offers. Follow these steps to select the right initial investment offering:

Evaluate coin’s initial offering team composition

By evaluating the initial offering team, you can gain important insights into the seriousness of the project. Follow the members of the development team and the consulting team to find out who they are and what they have achieved in the past.

You can get details about team members from social media such as LinkedIn or the companies they currently work for. You can even connect with them and talk to them, especially on social media.

The purpose of this research is to find out if team members have enough commitment, skills, and ability to ensure the project succeeds in the future. It is advisable to avoid such tokens if you notice negative feedback about members’ previous activities in the field of cryptocurrencies or other areas.

Check out the project white paper

Each token is as valuable as the project it designed. It is therefore advisable to invest only in tokens of projects with growth potential. To be more acquainted with the token design project, you should read its white paper.

White Paper is a credible report that informs readers about an existing problem and the project plan to fix it. White Paper provides details about the project, tokens and how they are distributed. White paper is an opportunity that the project builder(s) use to persuade an investor to purchase a token.

If you do not understand the vital point about the project in White Paper, be sure to seek answers from the development team. Before you decide on investing, get information on even the smallest details about the initial public offering of Quinn and the project.

Seek the views of important cryptocurrency communities

Cryptocurrency communities such as Reddit and Bitcointalk have become reliable sources of information for people who want to know about cryptocurrencies. Members of these associations can review projects and draw conclusions about them from different angles; Users can make decisions about their project based on these evaluations.

You can ask any question you have about a project in these forums for other members to answer, or read previous answers to such a question. Note that even in cryptographic forums you may encounter a positive set of fragrances whose authors try to make a particular initial offering look positive. Therefore, you should only rely on reports that are consistent with the findings of your personal and professional evaluations.

Evaluate the project’s long-term use of capital

As an investor, you can discover the potential of a project by researching how the project uses the capital raised in the long term. In this case, it is better to invest only in the initial supply of funds that are spent on project development. Sustainable development of a cryptocurrency project can help increase its token value and high investment profitability.

How to invest in coin initial public offering?

Once you have found the initial supply of your favorite coin, you can now proceed to purchase the supplied tokens. Here is how to put one together for use with your cryptocurrency tokens:

Read the token’s purchasing guide

Each ICO has its own design for the token sales process. In many cases, the projects create a web page for the interested parties so that they can choose the payment method they want to buy the token. Thus, other projects may prefer to use cryptocurrencies because they already have the operational framework to support cryptocurrency transactions.

To make a successful purchase, be sure to follow the recommended crypto purchase process. For instance, one of the things you should pay attention to is the maximum and minimum number of tokens that users are allowed to buy. Maximum restriction is to prevent the purchase of a large part of the token supply by an individual or organization.

Open an account in the supported wallet

You need to open a backed wallet after choosing the right coin to invest. Cryptocurrency wallet is a digital place to store cryptocurrencies. Note that although this definition is accepted, wallets do not actually store digital coins.

A cryptocurrency wallet is a collection of codes that help users interact with blockchain, send and receive their coins, and check their trading history. Private keys are an identification code that allows only you to access your coins in the blockchain. This key must always be kept private.

The second category of codes are public keys that act as wallet addresses. The wallet also creates a recovery phrase that you can use to recover if you lose your private keys. Make sure the wallet you choose supports the desired initialization token.

Join the platform, which is used to sell tokens

If the selected initial public offering token is sold through a digital currency exchange such as Binance or Kucoin, you must first join it. To do this, you must create an account at an exchange office and deposit money into it.

If you can only buy initial public offering tokens at a seller’s exchange through other virtual currencies such as Bitcoin, you will need to convert your money into cryptocurrencies through a platform such as Kraken or Local Bitcoin. Then transfer the coins to the token seller’s exchange office.

Kraken Crypto exchange

Go to the exchange trading platform to buy and select coin’s new initial public offering token. Then, find the pair of these tokens and passwords in your account and click on the purchase option. New tokens will be credited to your exchange account immediately.

Transfer tokens to your wallet

Most digital currency exchanges are considered insecure because of their centralization and easy hacking. If you look at the cryptocurrencies in the past, you will probably find that all the big losses have occurred in the exchanges.

For safe storage of early release tokens, it is best to transfer them to a secure wallet immediately after purchase. Wallets are a safer place to store digital assets because only the user has access to their private key. They will be safer if you can store tokens in a cool wallet such as a hardware wallet or paper wallet.

What are the pros of Initial Coin Offering?

Investors can enjoy the following benefits:

1. A chance to get a new low-cost cryptocurrency in the hope of great profitability (like buying Bitcoin in 2011).
2. Initial supply hubs may have other benefits, such as redistribution of project revenue among owners or owners’ exclusive access to project products and services.
3. Ability to support popular projects and teams by enthusiasts.

Meanwhile, token issuers get the following:

• Quick access to financial resources with less legal restrictions
• Money without loss of company shares, unless otherwise stated.
• Opportunity to create and test innovative decentralized business models
• An early user base that is eager to try out the project

Initial Coin Offering

What are the risks of Initial Coin Offering?

Of course, there are risks to this process. For example, token buyers may need to face the following:

1. A relatively inexperienced team with no guarantee that the project team members will live up to their promises.
2. Legal protection and profitability guarantee lackage.
3. Lack of sufficient transparency about project development and progress.
4. Risk of project fraud or the existence of a pump and dump scheme.

In conclusion

Initial Coin Offering, regardless of what it is and how it works, is of significant importance to a project. Our role as users in this category is to carefully select an initial offering for the company. Prior to participating in and investing in an ICO, be sure to carefully consider all aspects of the project.