Initial Coin Offering (ICO) is an unregulated and controversial form of crowdfunding using cryptocurrency that is a source of capitalization for young startups. In an ICO, a percentage of the generated cryptocurrency is sold to investors in exchange for a legitimate tender or other cryptocurrencies. This terminology is similar to a "token sale", an economics selling technique that gives investors access to a project from a later date.
Due to the success of Ethereum, ICOs are being used to fund the development of a crypto project by issuing a token. Cryptocurrency ICO mining has also become extremely popular. It became a tool that could revolutionize not only the currency, but the entire financial system. The ICO sign could become the securities and shares of tomorrow.
Concept
ICOs exercise ownership of the project. The coin in this context is a symbol of a share in an enterprise - a digital share certificate.
Unlikeinitial public offerings (IPOs), where investors purchase stakes in a company's ownership, for an ICO, investors buy the company's coins, which can evaluate profitability if the business is successful.
As of August 2017, there have been at least 400 ICOs. Ethereum (as of August 2017) is the leading block platform for ICOs with over 50% market share. Ethereum ICO networks have resulted in significant phishing, Ponzi schemes, and other scams.
History
An answer to the question: "What is a cryptocurrency ICO?" - can serve as a historical retrospective. The first token sale (also known as ICO) was held by Mastercoin in July 2013. Ethereum bailed out from a sale in 2014, raising 3,700 BTC (Bitcoin) in the first 12 hours, which is roughly $2.3 million. The ICO was held by Karmaquin in April 2014 under the project of Karmachares.
One of the first "main" ICOs launched by messaging app developer Kik in September 2017
ICO cryptocurrency exchanges as well as token sales are currently extremely popular. As of May 2017, there are currently about 20 offers per month, and Brave's new web browser ICO has raised about $35 million in 30 seconds. There are at least 18 websites that track the initial coin offering, including social media for cryptocurrency ICO announcements. At the beginning of October 2017, ICO coin sales amounted to 2.3 billion US dollars.
Mechanism for scammers
Upcoming Cryptocurrency ICOs can be used for a wide range of activities, from corporate finance to charitable fundraising to outright fraud. The U. S. Securities and Exchange Commission (SEC) has warned investors to beware of scammers using ICOs to perform "pump and dump" schemes in which the perpetrator talks about the value of the ICO to generate interest and increase the value of the coins, and then quickly "dumps" them to profit.
However, the SEC also acknowledged that ICOs “may provide fair and legitimate investment opportunities.” UK financial behavior experts also warn that ICOs are a very high risk and speculative investment. Even with legal procedures, funded projects tend to be at an early stage and by definition carry a high level of risk.
Definition
ICO is a fundraising vehicle in which a company attracts investors who are looking for the next big crypto score by issuing their own digital currency in exchange for bitcoin, usually. The initial coin offering is used by startups to bypass the strict and regulated capital-raising process required by venture capitalists or banks. In the ICO campaign, a percentage of the cryptocurrency is sold to the early supporters of the project in exchange for a tender and other cryptocurrencies.
Initial Public Coin Offering (IPCO)
Answer toquestion: “What is a cryptocurrency ICO?” - may be the following example. When a developer wants to raise money through an Initial Coin Offering (ICO), it usually creates a plan on paper that says what the project is, what needs will be met after completion, how much money to invest in venture capital funding, how many virtual tokens will be claimed by the authors of the project, what money is accepted and how long the event will be held.
During the ICO campaign, enthusiasts and supporters of the firm's initiative buy some of the common virtual currency cryptocoins. These coins are called tokens and are similar to company shares sold to investors in an initial public offering (IPO). If the money raised does not meet the minimum funds required by the firm, it is returned to supporters and the ICO is considered unsuccessful. If funding requirements are met within a certain amount of time, the funds are used to initiate or complete a new scheme.
Controversial investments
Early investors in operations are generally motivated to buy cryptocoins in the hope that the project will be successful after launch, which can translate into a higher rung of cryptocoin value than what they purchased for before the project started. An example of a successful cryptocurrency ICO rating, which has become profitable for investors, is the smart contract platform called Ethereum, where there are “ethers” as coin tokens. It was created in 2014and its record-breaking ICO was $18 million in bitcoin, or $0.40 per coin. The project went into circulation in 2015, and the very next year the value of the currency rose to $14 with a market capitalization of more than $1 billion.
High Risks
ICOs are similar to IPOs and crowdfunding. As in an IPO, a company's share is sold to raise money to support the operation of the enterprise. However, while IPOs deal with investors, ICOs deal with supporters who are looking to invest in a new project - crowdfunding. But ICOs are different in that the proponents of the former are motivated by the perceived return on their investment, while the funds raised in the latter campaign are mostly donations.
Despite successful transactions, ICOs have the potential to be disruptive innovation tools in the digital age. Investors should be careful as some campaigns are actually scams. Since these fundraising operators are not regulated by financial authorities such as the Securities and Exchange Commission (SEC), funds that are lost due to fraudulent initiatives can never be returned.
In early September 2017, the People's Bank of China officially banned ICOs, citing it as destroying the country's economic and financial stability. The central bank said that tokens cannot play the role of a currency in the market and banks cannot offer services related to ICOs. As a result, both Bitcoin and Ethereum collapsed.
What is Cryptocurrency ICO
Cryptocurrency is a digital or virtual currency that uses cryptography for security. When the question arises: “How to make a cryptocurrency ICO?”, you should remember that due to the security feature, it is difficult to fake it. The defining feature, and perhaps most attractive, is the organic nature of such a currency - it is not issued by any central authority, making it immune to government interference or manipulation.
Quick start
The anonymous nature of cryptocurrency transactions makes them very convenient for a range of dishonest activities such as money laundering and tax evasion.
The first cryptocurrency was Bitcoin, which was launched in 2009 by a person or group known by the pseudonym Satoshi Nakamoto. As of September 2015, there were over 14.6 million bitcoins in circulation with a total market value of $3.4 billion (201.5 billion rubles). The success of this currency has spawned a number of competing cryptocurrencies such as Litecoin, Namecoin and PPCoin.
ICO cryptocurrencies and blockchain: advantages and disadvantages
Cryptocurrency facilitates the transfer of working capital between parties in a process in a single transaction. These transfers are facilitated by the use of public and private keys for security purposes. Funds transfers are carried out with minimal processing fees, which allows users to avoid the large fees charged by most banks andfinancial institutions for bank transfers.
Bitcoin's central blockchain is the blockchain that it uses to store an online ledger of all financial transactions that took place using this payment element, providing a data structure for this ledger that is subject to limited threat from hackers and can be copied to all computers running the Bitcoin software. Many experts view this blockchain as important in technologies such as online voting and information transfer, and large financial institutions such as JP Morgan Chase see the potential of cryptocurrencies to reduce transaction costs, making payment processing more efficient.
Because cryptocurrencies are virtual and do not have a central repository, a digital cryptocurrency balance can be destroyed in a computer crash if a backup does not exist. Since prices are based on demand, the speed at which a cryptocurrency can be exchanged for another currency can fluctuate greatly.
Security issue
Cryptocurrency is not protected from the threat of hacking. In the brief history of bitcoin, the company has been the subject of more than 40 cases of theft, including several in excess of $1 million. However, many observers in their comments see cryptocurrencies as a hope that there could be a currency that retains value, facilitates exchange, is more mobile than hard metals, and is out of reach.central banks, financial institutions and governments.
The Cryptocurrency ICO schedule has a specific goal to fund the project - this means that each token will have a pre-set price that will not change during the initial coin offering period. This fact also illustrates that the token is static.
ICO List
By analyzing the list of cryptocurrency ICOs, one can combine all the main characteristics or factors of a successful ICO in both fundraising and evaluation. Let's list the main ones. So we will complete the answer to the question “What is an ICO of a cryptocurrency?”
Nxt is a complete economic system platform that allows users to launch assets that can be exchanged decentralized through the Nxt exchange. Users note that it also allows you to add plugins and access the Nxt platform through the API. The NXT ICO began on September 28, 2013 and continued until November 18, 2013, when 21 bitcoins worth about $14,000 were raised. The ICO was conducted in an "unofficial" way through an anonymous account, with funds sent to the sponsor's personal Bitcoin address with a special message attached
Ethereum is a smart contract and decentralized application platform that has gained a lot of popularity over time. Ethereum runs through the Proof of Work protocol. The Ethereum ICO ran from July 20, 2014 to September 2, 2014 (42 days). 31.5 thousand ETH($18.4 million) were raised during the initial coin offering period, making it the second most successful ICO and the 6th highest funded project. The fact that the development team is holding funds in BTC causes them to lose a significant portion of their funding due to volatility. The currency rose in value.
From the feedback, you can understand that several projects have been built and are being created on the Ethereum virtual machine - DigixDAO, Ardor, Singular-DTV and Iconomy.
