What is ICO?
ICO is an unregulated way of the crowdfunding used by companies to raise fund. In this article, we will try to answer all your queries related to the ICO.
ICO or initial Coin Offering is an unregulated method of crowdfunding. It exists outside the conventional financial system and based on the new digital cryptocurrencies. ICO is now very popular among young aspirants since it offers effective and achievable ways to raise capital funds to run their businesses.
It acts as the fundraiser and helps companies to sell ICO tokens to raise funds. Investors buy these tokens using either preexisting digital tokens or fiat currency. They believe that this token is going to perform better and offer more benefits compared to their investment. The companies that hold ICO use funds of the investors to launch their product or start a digital currency.
The first set of the ICO was held by Omni Layer in 2013. This model was designed to help startups to raise the required fund to start a business.
What Is ICO Trading and How Does It Work?
ICO trading works as the easiest and effective way to help companies to raise fund for their projects. The company takes a dedicated time frame such as weeks or months so that interested investors can come forward to buy new tokens by simply exchanging their existing cryptocurrencies or fiat currencies.
They set a specific limit or goal for their project funding. That means tokens will come with pre-designated price levels and with an open and close date. The token supply will be static during that period. Also, some companies offer a bonus. But the number of tokens will not be flexible.
Companies that sell tokens to raise funds will need a White Paper Plan to clearly describe their projects. The plan will include all the details such as stages, fund, number of the token, roadmap, advisor share, bonus, and a lot of other things. The benefit of the ICO is that investors will get back their investment if the project fails to raise the required fund.
you can trade on ICO with MGC Logic
ICO VS Existing Cryptocurrencies
ICO and Cryptocurrencies are different in many ways. They are created for different purposes and serve different interests as well. Start-up companies launch ICO by developing crypto tokens using blockchain. It enables businesses to issue tokens and investors buy those in exchange for cryptocurrencies. You can say that ICO is normally used as fundraising tools to trade the future crypto coins in the exchange of the liquid value such as the altcoin and Bitcoin.
The investors will eventually get back their investment if the business succeeds to raise more funds. Here the profit or loss will entirely depend on the company’s ability to raise fund, unlike cryptocurrency. In cryptocurrency, success will mostly depend on the market condition. When the market condition is favorable, investors can expect more benefits. In adverse conditions, they might lose all their hard earned money.
ICO is restricted to the time or cap. The number of tokens cannot be increased during the sale. Also, the price will be static. The tokens are digital tokens. Successful projects will raise the value of the tokens and ultimately investors will earn more money.
Cryptocurrencies are virtual currencies and can be used for payment like the government-issued currencies. However, the crypto market is volatile and unpredictable. Even if you are an experienced trader, you might lose all your money. That will not happen with ICO. The ICO investment is a bit predictable if you go through the details of the Whitepaper and others.
Your investment will not be subjected to the market condition which is always unpredictable. Instead, it will be subjected to the company that is holding tokens. You can minimize the risk by understanding the company and its potential to fulfill the claims. With proper research, you can reduce the risk significantly. If you find that the company has not a clear goal and roadmap, you can change your decision.
Though ICO is part of the crypto since investors use cryptocurrencies or fiat currencies to buy ICO tokens, still, it will not be subjected to the cryptocurrencies market condition. Once you invest in cryptocurrency, you will not be left with any other choice except to admit the end result. However, in ICO crypto, you can notice a great difference. You can even get back your investment depending on the policies of the token issue company.
From the above, you might have realized that ICO is safer than cryptocurrencies. All you need is proper research before planning an investment.
Basic Trading Guidelines and Homework You Need to Do Before You Start Trading ICO
The guideline for ICO will be different from The Cryptocurrencies Trading Academy. You need to follow some specific ICO guidelines to make a smart investment.
In the current condition, ICO scams are not rare and you can be a victim if you do not do your own research. Here are a few tips that you can consider before investing in ICO.
Read the whitepaper and make sure that you understand the details. If required, take the help of experts to find out the possible lacking. Also, you can contact their social media channels to interact with the team and get answers to all your queries. Compare all the positive and negative sides to make a better decision.
Investigate the website and make sure that they are genuine. Search on Twitter, Facebook, and other job sites to know they exist or not. A Google search can really help you to know more about team members.
Observe their announcement on different platforms. Check on Bitcoin Talk Forum to know more about the reliability of the team. You can also follow the experts in the field to have better insights. Understand the coin distribution, fix, and sale date. In addition, know the token economies.
You should not invest until you have formed an idea and create an impression about the ICO. Better insight is important to ensure the right investment.