Much has been said about Initial Coin Offering (ICO) but digital money enthusiasts are still wondering how they can tap into the opportunity. Well, here is some help to make you understand what ICO is all about. Cryptocurrencies are based on blockchains where ICO is initiated from, thanks to Ethereum that diversified from money transaction to everything else and are the ICO brainchild.
Blockchain platforms allow companies to raise funds; just like when companies raise money on the stock market. With digital currency, you are issued with tokens in denominations of Ether or Ethereum currency. Rising of ICOs has been in existence for a long time but this was for the purpose of selling shares to the public. Ethereum only added a twist by adding the function through their blockchain.
ICO tokens are sold directly to the public and there are no middlemen. Unlike in the banking industry where shares are floated in the stock market; a bank gets shares at a discount and sells at a higher rate on behalf of the company and makes a profit. This way, the price of shares is inflated to pay commission to the bank that acts as the middleman.
Flat Rate Payments in Order to Get Tokens
With ICO, tokens are sold to the general public or users at a flat rate. There is no markup to worry about and this enables the shareholder to reap maximum benefits from the ICO issue. Once you buy your tokens, you store them in your wallet as normal Ether and can trade with them once purchase is confirmed.
Traditional banks had monopolized the stock market and ICO is seen as an alternative to buying shares through banks. These institutions asserted themselves on the consumer by acting as middlemen to fleece then of their hard earned cash. The entry of ICO cut down this powerful cartel by directly connecting companies with the public.
ICOs are relatively new and their emergence means a lot to the traditional stock market. To raise an ICO, you begin with a white paper that has detailed ‘user case’ for a blockchain. This is like the normal business plan for the digital currency platform. Mostly, currency founders formulate the concept and floated to the user to create awareness and arouse interest.
Protect Yourself: Be Sure to Read The Business Plan on Each ICO Offer
The business plan explores any risks and opportunities in the new project. Usually, this is aimed at closing gaps in the market or raising 
funds to support new platform upgrades. This is not restricted to a group of users, it is a public offer and as long as you are in the network, you are free to participate.
Apart from raising additional funds to initiate new projects in the blockchain, ICO are meant to create awareness and grow the user base. Mostly, it is used as a marketing tool to entice adorers to become users and later spenders in the cryptocurrency market. More users join through the ICO issue bring more vibrancy in the creation of blocks as miners. When the mining activity grows network transactions are executed faster; an ideal stimulator of speedy way of sending and receiving currency and fast deal closing which benefits the investor.
What Does ICOs White Paper Stands for?
Once the ‘business plan’ is approved, the platforms website builds on the white paper. Professionals are brought in to articulate the company goals. Once they agree on the goals, established digital currency investors are contacted for possible ICO participation. This is the final stage before the Initial Coin Offering commences.
The platform has to create a special code before the ICO officially commences. These are unique codes with special cryptocurrency wallets. You need to store your ICO token in a storage where you can transfer, trade or send your ICO tokens from. Once this stage is completed, next is the crowd sale that has a pre-determined time frame.
To participate and start investing in the Initial Coin Offering, you need a wallet. This helps you store your digital currency private key. The key helps you transact business; without it you cannot send or receive funds. Private Key is a set of unique numbers and characters that work like your traditional bank account number. You can high quality virtual wallets from Jaax or MyEtherWallet or from your favorite host.
Armed with your wallet, go to the ICO website and get their address or public key and the date and time of the coin offering. Copy their address or public key, set aside the amount you want to spend and note any other requirements on the ICO site. When done, you need to wait for the date and time and buy your tokens or shares.
Once you know what are Initial Coin Offering are, it is important to know that like any other investment ventures, ICOs have their risks. This is a totally unregulated financing method and can be highly volatile. If you are a risk-tolerant investor; this is the kind of investment you need to go for. Nothing comes without risks in the business world.
