With the development of blockchain technologies and bitcoin popularization, Ethereum and other cryptocurrencies in the year 2017, a new term initial coin offering (ICO) not just entered our life but literally burst into it. In order not to get confused with real money, they began to use tokens instead of coins. The token is a sign or a symbol used to replace money.
If everything is more or less clear with terms, let us consider more detailed the phenomenon of ICO, where it came from, what it is used for in simple phrase.
In case you are familiar at least a little bit with a financial market, meaning stock market, you most likely drew a few parallels between a similar shortening IPO (Initial Public Offering), which is widely used in the environment of professional investors and traders.
Using blockchain technology, meaning a company creates its token on a block chain of its own or a reverse blockchain, that same Ethereum, and in return for your bitcoin, dollars, rubles writes down in blockchain a certain number of tokens on your wallet. Cost for a collection of such investments are easy to settle in salaries of 2-5 people, at that one-time and there is no need to keep a staff of economists and to pay stock markets, depositories to place their stock items, all the more a part of one`s profit to shareholders. In other words, blockchain during ICO acts as entirely independent and open depository.
On the other hand, there is no need for investors to go through verification of their identities; a barrier to entry in ICO can be from 1 dollar or even less and no supplementary collections. Which is to say that to invest in ICO is way easier and simpler than on stock market, it is not enough to have an access to the Internet and to understand operating principles of blockchain technologies. Apart from that investment in new can promise an increase of capital in thousands and tens of thousands percent, as long as it is easier for new companies and small ones to develop capitalization than for big companies.
Solving many problems, ICO also added its new specific problem, which is a reliability or honesty of a company going to ICO, in other words under the image of carrying out ICO, a lot of swindlers appeared on the market, which simply raises money giving nice promises. In order to detect swindlers, public regulators suggest conducting sales of tokens through stock markets, which are going to conduct a company assurance. Such a solution does not make it to where many obstacles between companies and investors fade away but except perhaps reduce costs of the companies and investors at making deals.
Since the countries` government is just about to decide what to do with ICO, many participants already occupy this market, offering paid consultations for investors and even special stocks for investment in ICO of different companies, which they believe to be worthy to invest and measure up to their clients.
About the author: Melisa Marzett who is fond of writing and currently working for Professional Smart Essay Rewriter Company, has just returned from a long trip to Mexico and eager to find new guest post opportunities to contribute with an article.