ICOs have a potential of being the leading source of capital for the upcoming projects. ICOs use blockchain technology that ensures an end to end encryption. This trend has been positively embraced mainly by technology-based companies. ICOs have brought numerous benefits to the businesses that use them. These benefits have made ICOs outdo traditional sources of capital. Companies have continued to raise over hundreds of millions through ICOs. Organizations that use ICOs enjoy a range of benefits.
To the company
Positive networking effects
The decentralized applications are the ones that mostly use ICO to raise their capital. ICO model brings positive network impacts and encourages numerous users to continue using the applications. Whenever a company uses ICO, then they can automatically generate users that can sustain operations and security of the decentralized networks. If the people who bought the digital tokens are the users, then marketing the product will be relatively easy. This is because token holders will invest their time, money and resources to the growth and success of the decentralized network
Fast and easy fundraising mechanism
Anybody can initiate an ICO whenever it is needed. Tokens that are customized can also be obtained from a number of digital platforms. Transaction costs involved in marketing and contribution settlement are also lower as compared to traditional methods of gaining capital.
Gain online marketing
Tokens can be marketed over the internet. Marketing through the internet meets a large general audience. Potential investors can also get the information from the company’s website. Online forums, online messaging apps, social media websites can also be used primarily to market the digital tokens.
Secure settlements
Contributions are sent through an encoded system .this end to end encryption ensures the senders and recipients are concealed. Traditional systems require that you send contracts, wire transfers and manage contracts which is more workload.ICO system requires less effort and resources as compared to traditional means.
To the investors
Instant liquidity
Popular tokens have liquid markets based on cryptocurrency exchanges. The liquidity may last at most 24 hours when dealing with popular tokens.
No locational barrier
Venture financing is locational biased while else ICOs are locational friendly. Despite your location, you get to enjoy ICO benefits and permits everyone to contribute.
High potential to make profits
On buying digital tokens, you purchase them at relatively cheap prices. Over the time, the market learns about the project, and if they embrace it, then you make a profit on selling the tokens. Whenever dealing with cryptocurrency, the crypto asset is likely to appreciate, and you make profits out of reselling.
Trends in ICO
In various countries, organizations are considering issuing tokens under the assumption that they are considered securities. Some are still awaiting word from regulatory bodies such as SEC on regulatory requirements when dealing with ICOs.
To the consumers, they are becoming more cautious about trading ICO tokens. The cryptocurrency community is looking into self-regulating token sales on behalf of the public. Organizations have been set up to establish the best practices and standards for ICOs.
Despite the efforts of both companies and individuals, there are multiple risks pertaining to ICOs. The demand in tokens is also raising especially because of the blockchain technology. Investors should continue enjoying the benefit as they target to make ICOs better.
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