Initial Coin Offering (ICO) is a crowdfunding method utilized by fresh cryptocurrency companies to raise capitals. Back in ICO, some proportions of those recently issued cryptocurrencies are sold to folks who are interested in supporting the project. They’re sold to swap for other based cryptocurrencies like Bitcoin, Fiat and Ether.

It’s comparable to the principle of folks making a profit once the share they bought at the stock exchange increases in value. ICO is different than purchasing shares at a stock exchange because you don’t receive a share of the possession right when you purchase the new tokens.

Brief Background on ICOs

Ethereum conducted one of the biggest ICO in 2014 by increasing a total of $18 millions in the first phase of 2014. They break the record by raising 3,700 Bitcoins that’s equivalent to $2.3 million dollars within the first 12 hours of the campaign. Kik ran the first Egyptian ICO in September 2017 however, the job was disrupted by a phishing scam via the circulation of a fictitious URL in the social media.

Today, ICO sales have become increasingly popular with around 50 token earnings being conducted each month. Beginning from 2017, ICO has been growing at a fast pace with at least $2 billion worth of nominal earnings successfully conducted. This proves that it is not going to be a temporary method used by new cryptocurrency business to increase funds but it is here to stay for long term.

These days, ICO token sale is so popular that at least a couple ICO starts every day. It has been predicted that over $4 billion worth of nominal sales will be conducted this year. They figure out how to increase a total of $2.3 million in the market presale.

How Can ICOs Fundraising Work?

A cryptocurrency company which wishes to raise capitals via ICO must provide a few details including job description, project purpose, amount have to be raised, percentage of tokens the company will keep, types of virtual currencies accepted, and the timeframe of this ICO campaign. Backers that are interested will email the vendor and ask for more information of this job before performing a trade. If they raise the sum for your effort, they will carry out the scheme to finish the undertaking. Otherwise, they will return the money back into the backers.

ICO can be conducted to help raise funds for various kinds of companies and charity organization. It has also been used as a tool by individuals to conduct frauds. Scammers would utilize means to grow the ICO value briefly and abandon the job afterwards to make a quick profit. Scams happen because of the lack of regulation by the government. Just like any investment, there’s a risk when coming to put money into the first coin supplying.