What is an ICO?

What is an ICO?

ICO is Fundraising for a new CryptoCurrency

An initial coin offering (ICO) is a nontraditional way to raise money for a startup. Essentially, when a tech developer has an idea about a new start up, the traditional way to raise

funding would be from family and friends, angel investors, or traditional sources, like venture capital firms or the banks.

What accompanies an ICO?

However, with the invent of cryptocurrency and smart contract applications, tech developers have a new method to secure funding, called an ICO. Basically, an ICO is a way for a tech developer to create his or her very own cryptocurrency. Then, after the tech developer has developed a team and has finalized the whitepaper (idea on paper), the developer will offer the token at a discount to willing investors, before the token is offered to the general public.

The willing investor is basically being rewarded for taking a risk with the tech development before it is actually put into form, and is betting on the fact that the value of the development will rise after it is offered to the general public on cryptocurrency exchanges.

What is needed to launch an ICO?

In order to launch an ICO, the tech developer must have a solid team, a well thought out idea, a whitepaper, a built in community around the token, and enough marketing tools to help ensure that the ICO launch will be a success.

Additionally, there is some debate on whether or not ICO’s are offering securities or mere utility, so therefore the SEC can step in if it thinks that the ICO itself is actually a representation of a security, or if the ICO is making misrepresentations, that can mislead the uneducated cryptocurrency investor into financial demise.

More relevant ICO information

Most ICO’s involve industry and blockchain development. The blockchain is a new way to record transactions that involve peer to peer network availability, immutability, end to end audit trailing, and immediate encryption. It can be arguably said that blockchain development can result in the disruption of industries worldwide, and change the way business is done on the network itself. Blockchain is the inherent technology behind the original cryptocurrency, bitcoin. However, since the evolution of bitcoin, ethereum has taken its blockchain technology, and made it where decentralized applications can be built on top of the network. Therefore, conceivably, blockchain transactions, which result in each transaction being permanently recorded on the blockchain, can be applied to industry and goods, worldwide.

With the evolution of bitcoin, blockchain, and the newfound ICO trend, it is unlikely that a tech developer will be without innovative ways to seek funding for a viable startup.