You may have heard a lot about initial coin offerings (ICOs) if you follow the cryptocurrency space; it’s popular among people who look for high-tech investment opportunities.
Nowadays, it has become a common way of fundraising by startups. But what does the term actually mean, and what are its pros and cons? Let’s find out.
What Are ICOs?
ICOs are the fundraising vehicle for cryptocurrency or blockchain-based service startups. If an individual owns tokens or coins through an ICO, they can either own a stake in the project or use the service when the project is complete.
Mostly, the investment in ICO goes through Bitcoin or Ethereum. In return, you receive an equivalent amount of a new cryptocurrency that the project is offering. However, the tokens or coins that you get may not yet yield much of a return.
When the project successfully delivers the promised results, the value of the tokens increases. If you wish, you can sell your tokens in the cryptocurrency exchange to exit with your profits. The project owner will let you know which cryptocurrency exchange will list the tokens during the ICO campaign.
The ICO could either be public or private. In the two sections below, you’ll find out a little more about each of these.
1. Public ICO
If the fundraising campaign is open to everyone, it’s a public ICO. As anyone can participate in this program, you can also call it a democratized ICO.
You’ll know about public ICOs on popular technology websites, cryptocurrency exchanges, and social media platforms….
