- Initial Coin Offering (ICO) are crowdfunding campaign for cryptocurrency start-ups.
- Start-up developers establishes a currency platform so that a significant amount of initial coins are allocated thereby enabling those initial coins to be auctioned in order to raise capital.
- If the currency platform is successful, initial coins offered will rise in value allowing ICO investors an exit.
- Some start-ups also offer guaranteed equity in the business for the ICO investors.
- Ethereum is one of the prominent examples of an successful ICO. It was initially launched with a sale of 31,591 bitcoin (then around USD 18.5 million) in exchange for first 60 million ether tokens.
- Since Ethereum, there were more than 10 more successful ICO’s on the Ethereum platform which includes Basic Attention Token tracking-free advertising on the Brave adblocking browser, MobileGo token used in a cryptocurrency-based video game marketplace, Bancor Network Token which backs a platform designed to make it simpler for developers to make and launch their own blockchain tokens.
- Investing in any ICO should be considered only after understanding the technology / platform / currency and after start-up management / community background check, among other points.
- Therefore, at this stage, when cryptocurrency valuation are volatile, an investor should not consider cryptocurrency as a short term gamble, but they have to consider cryptocurrencies as either:
a) Medium to long term investment instrument whose valuation will increase with greater acceptance and when certain required regulations sets in.
b) An opportunity to invest in sound start-ups based on solid technology through ICO’s.
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