An Initial Coin Offering, also commonly referred to as an ICO, is a fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin and ether. It's somewhat similar to an Initial Public Offering ( IPO ) in which investors purchase shares of a company.
An ICO typically involves selling a new digital currency at a discount — or a “token” — as part of a way for a company to raise money. If that cryptocurrency succeeds and appreciates in value — often based on speculation, just as stocks do in the public market — the investor has made a profit. Unlike in the stock market the tokens gotten does not entitle the owner any rights to the company or cash flows like dividends.
WHY ICOs ARE A BIG DEAL
Blockchain projects have raised a total of $8 billion with initial coin offerings (ICOs) so far according to data from the CoinDesk ICO Tracker. They are of course a big deal and the funds raised from the sale of the tokens are used to finance the development of the product being promoted by the company or organisation operating the ICO. During ICO sales and give aways the company prepares a white paper which provides insight into the ideas of the company and what the token is all about, how it will be grown, what problems it will solve and possible benefits and discounts for initial and early investors.
HOW MUCH PROFIT ICO POTENTIALLY MAKE
The success or potential profit in an ICO depends on the ability of the company to get a large amount of public interest and demand which drives the value of tokens and coins up. This is the reason why most early investors use the "get and hold" technique or approach where they buy the tokens and hold out for as long as possible till the coins return massive profits. There are so many examples of ICOs that were launched between 2016 & 2017 that are already delivering massively on investment for the early investors.
As is shown here these are massive returns in profit and with returns like this we can see how easy it is to turn little capital into a fortune, but with such figures it's also no surprise that there are now more scams than proper ICOs in the cryptomarket today and it's becoming increasingly difficult to know for sure which is real and which is just basically out to get your money.
THE WHITE PAPER
This is truly the only way to know for sure if an ICO and their tokens being given away is here to stay or just a quick rich scheme. While going through the white paper it should be able to answer the following
A white paper capable of answering these questions is an ICO worth taking a look at. Bear in mind, investing in cryptocurrency ICO and token sales is at your own risk as there is no investment whose profit is 100% assured.
Do you have any other pointers, tips and general knowledge on ICOs? Let us know in the comment section
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