about ICO

What is ICO?

An ICO is a process whereby a startup or a company offer a percentage of tokens based on cryptocurrency for sale. This is marketed to early investors in order to raise some funds in form of digital currency and kick off an ambitious project. In case of an ICO, the most vital tool is a decentralized application called Smart Contract. It is this application that enables transactions on Blockchain. In fact, Smart Contracts are responsible for minting new cryptocurrency tokens, their resale and distribution, as well as, any mechanics that you want to add as an inflationary measure.

ICO over IPO?

ICO is very similar to Initial Public Offering, only it is based on Fiat money. Now the question would be why we chose to invest in ICO, when launching IPO would have been a less complex and less risky procedure. To know about this we need to look into the basic differences between the two fund-raising mechanisms.

IPO

  • The private companies, who want to improve their pecuniary position and look forward to acquire other companies, as per their growth strategy, generally go public.

  • It involves selling of shares to public in exchange for money after opeining of a DEMAT Account.

  • Every shareholder gets a percentage of share as ownership and can exercise their right in decision making.

  • Legal procedures verify the credibility of the company issuing shares as a part of IPO. Material information related to the company's functioning is presented and marketed to public through Prospectus for making the investment decision.

  • It is regulated by a number of legal formalities and hence is a tedious and lengthy process that may even take around six months.

  • International accessibility is lesser owing to their reliability on fiat currency.

  • Trading in stocks involve hefty charges that are mainly charged by intermediaries.

  • Stock Exchange settlement may take a few days. IPO rules are quite stringent and flexibility of transactions are quite low.

ICO

  • A fundraising method popular mainly with start-ups that have businesses based on products and services related to Blockckchain or Cryptocurrency space.

  • It includes creating and selling token through Blockchain tenchnology in form of cryptocurrency.

  • The investors do not any stake in company's ownership and hence they have no say in the decision-making.

  • A Whitepaper is created and marketed for potential investors outlining their plan, problems that they look to solve and other key information. Investors judge the credibility by verifying the founders profile.

  • The bureaucracy around ICO is almost nil and there are no formal regulatory regime governing ICOs. An ICO generally takes a week to 1 month to complete.

  • Being based on Blockchain and internet, the international coverage is quite high.

  • Cost of transactions is less since the trading is off digital currency and no intermediaries are involved.

  • Settlement of transfers take place in minutes. The flexibility of transfers and sale is quite high as well.

Based on the above theory, the reasons for investing in ICO can be summed up as follows:

 

  • To be a part of the revolutionary concept that Blockchain is and to participate in the comprehensive digital payment solution bandwagon.

  • To invest in a futuristic asset of cryptocurrency that is also a technically advanced and secured option for trading.

  • To provide investors the convenience of trading with dedicated apps, digital wallets and digital crypto exchange.

  • To gain international accessibility and widen the reach of the venture capital by basing it on cryptocurrency and multiple fiat currencies that ICO allows.

  • To establish an amount of trustworthiness in digital services, ICO and cryptocurrency in the minds of the users and investors and contribute to the Digital Movement across the globe.

  • To raise significant amount of fund for the prospective business projects that deserve proper brand recognition.