Initial Coin Offering (ICO): Fundraising method in Cryptocurrency
ICO is the crowdfunding method of raising a capital for an open-source software business which can garner enough funds for their start-ups, it enables the investors across the world to exchange tokens and some special services by hand-in-hand.
Investors after buying a token get the privilege in the governance of the project matter, they can now have the details and information about the working and control of that particular project, this digital token is earned by investing a proportion of money for the development of the project.
What does White paper stand for in Cryptocurrency?
Issuing a white paper while launching an ICO fund, means it will elaborate the terms and conditions of the project for which the fund has to be raised.
It will be containing the important details and frequently asked questions related to authenticity of the cryptocurrency-based project.
It will help to answer the questions which raise an issue on the continuation and profit margin of the project and also it ensures credibility among the investors who are looking forward to investing in the project for future profitability.
An ICO whitepaper can also suggest the type of cryptocurrency which will be used for transactions taking place inside the project.
How does ICO funding work?
As ICO is a fund-raising method, but it also comes with regulations and protocol which are based on the type of token which will be functioning under the ICO, the two types of tokens which plays important role under the ICO regulations are:
Utility Token
- Utility token are also known as user token
- It guarantees the future access to its user in every matter related to the development of the project for which he has bought this token.
- Regulation applied by the government can be removed over the utility token when the utility token is converted into a standard form of investment.
- It helps in increasing the brand value of the project by its pre-distribution of digital token which is not even launched in the crypto market, with this it links many of the users by distributing the coupon and making them its investors for the future development of the project.
Security Token
- It is a liquid contract which can be exchangeable during market volatility and holds the same monetary value as real estate or any precious item.
- This gives ownership value to its investors in the form of bonds, stocks etc.
- Unlike ICO they are more regulated and cheaper than ICO which offers the same service offered by the ICO but in a very protected manner.
How do I enter into an ICO?
One can follow the idea of searching online for such ongoing ICO related projects and staying updated with the idea of ICO terms and condition, here you can follow the following tips and steps for joining ICO module:
- Enter in the 100 percent transparent project which is offering each and every detail of its model when you buy the token for its investment.
- Do a proper study about the ICO related terminologies and its way of working, so that you can’t get honey trapped.
- Always look for the wallet which they are using to store your ICO funds, the wallet must be highly protected and secured.
- Check their ICO whitepapers and read the instructions and conditions given on it, also try to find the potential of that project through reading it properly and don’t skip any section which could create a legal issue later onwards.
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