Initial Coin Offering generally referred as ICO is one of the most advanced ways of raising funds for the business. It can be claimed to be the biggest trend in crypto currency today. The method is being used widely by business owners. If you are into business and haven’t heard about ICO’s, you are living on the North Pole. It has been the nerve center for fund raising for quite some time now and one must have hands-on knowledge about ICOs to reap the benefits. Here is a complete guide on ICO that will help you understand this complicated term in a simple and easy way:
What is Initial Coin Offering?
Initial Coin Offering is an exchange trade wherein a business or an individual offers investors a new type of cryptocurrency in exchange of any existing crypto currency like Ethereum or Bitcoin. Started in 2013, this is a way to fund new cryptocurrency businesses and has been a great success so far. The pre created tokens have a value attached to them and as and when they develop in the market, one can trade them on crypto currency exchanges as their demand arises.
The first successful ICO was Ethereum and considering its success, more and more cryptocurrency developments are seeking the support of ICO. This way ICO not only boost the crypto currency but also revolutionizes the entire financial system.
History of Initial Coin Offering?
There is no assured ground but the experts claim that the first cryptocurrency distributed by an ICO was Ripple in early 2013. Created by Ripple Labs, the Ripple Payment System created 100 billion XRP token for the first release. These tokens were sold to raise fund for the development of the platform.
This pattern was followed by Mastercoin in late 2013, Lisk in 2016. The biggest success, however, was recorded by Etereum as the Ethereum Foundation sold each ETH against 0.0005 Bitcoin in mid-2014.
Types of Initial Coin Offering usage:
As aforesaid, Initial Coin Offering is used for two primary purposes: Crypto coins & Crypto Equity. Let us discuss this in detail:
- Crypto Coins:
This is when ICO is used to create a different type of Bitcoin that is unique and has its own value and features associated with it.
- Crypto Equity:
Here ICO is used to fund a project that demands Bitcoins for its operations. The usual method of raising Crypto Equity is crowd funding; offering more and more people to contribute. The equity thus bought can be exchanged in specific crypto exchanges. This is more like investing in the idea of a startup and wait till it becomes successful.
Augur, Singular DTV, Golem, Melonport, First Blood, Digix DAO, ICONOMI, etc. are some example of successful ICOs. The trend of ICO has supported many start-ups with good grace and this is the reason that more and more companies today believe in ICOs. It holds immense potential as it enables companies as well as individuals to freely raise capital for their projects. And as it is a decentralized system, it becomes all the more easy to access.