Have you ever heard of an Initial Coin Offering? Read more here!
What is ICO?
Initial Coin Offering (ICO) has the meaning of initial offering of coins or tokens.
Interest investors can buy when the offer is made and receive the company’s newly issued cryptocurrency tokens.
This token can be utilized and have several uses. For example, people coins can use a product or service that a company offers. Not only that, by buying coins or crypto assets, you own shares in the company or project. Many companies engaged in the blockchain sector have used ICO schemes. Prospective investors or crypto holders need not hesitate to buy the initial coins released. Usually, companies that do ICO will increase the price of coins as the performance or projects they undertake. As an investor or crypto holder, you will definitely profit.
How Does ICO Work?
A company that does an Initial Coin Offering (ICO) usually creates a white paper that describes in detail the projects they undertake. The white paper also contains about how much money necessary, how many tokens will profit and others.
During an ICO campaign, potential investors or crypto holders usually buy several tokens with digital or fiat currency.
Now, if the money collected from the ICO results does not meet the minimum funds required by the company, the money can be returned to the potential investor or crypto holder. In other words, the project that was trying to run was not successful. On the other hand, if the funding from the ICO is fulfilled within the specified time period, the project can run. ICOs can be structured in a number of ways. In some cases, companies set specific goals or limits for funding. So, each token sold in the ICO has a predetermined price and the total token supply is static.
What are the advantages and disadvantages of an ICO?
Every company can easily do an Initial Coin Offering (ICO). The advantages of ICO are that the potential for returns is very high.
This is what attracts potential investors or crypto holders. As usual, potential investors usually expect them to make a quick profit on their coin buying investment. However, the ICO scheme also needs to be watched out for because there are no standard regulations. ICOs are vulnerable to being used by companies to defraud aggressive but ill-informed potential investors.
Conclusion
That’s an explanation of the Initial Coin Offering (ICO) that you need to understand. Keep in mind, ICOs have advantages and disadvantages.
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