When you start reading, learning, and investing in the cryptocurrency market, you always come across the term “Initial Coin Offering” (ICO). And you wonder what does that mean? Should you invest in an ICO? Is it risky to invest in an ICO? Will you ever earn profits by investing in an ICO?
Well, the questions are innumerable. And the lack of an answer may confuse you. So, our experts sat down and created this quick guide about ICO and answered the most frequently asked questions for you.
Let’s see what they had to say.
ICO: What is it?
ICO is a method to introduce a new crypto coin to the market in the hope to raise funds for developing the said crypto coin.
For example, you have developed a new crypto coin that you want to introduce in the market. The only thing you need is money. And you can get that by connecting to a venture capitalist. However, you might have to give a certain part of the company’s ownership to the said venture capitalist.
Now, what if we told you that you can raise money for your new crypto coin without giving away the ownership of your company? That’s where ICO comes to your rescue.
All you need to do is create a white paper detailing how your crypto coin will work. You create a fantastic website and ask people to invest in your crypto coin. They can either send you Bitcoin or Ether or send you fiat currency. In return, you give them a few of your crypto coins. You use this money to build the crypto coin and successfully introduce it to the market.
The people who send you money will now have to sit back and hope that your crypto coin gains momentum for them to earn profits.
ICO: Who can introduce it?
Basically, anybody! As long as you have the tech knowledge to develop a coin, a fancy website, and market your coin, you can introduce the coin as ICO. Also, the crypto market is highly unregulated, hence it makes it easier for anyone to bring an ICO.
However, this also gives rise to the possibility of a scam. ICO is the easiest way to create a scam crypto coin and abscond the money. Hence, when you get to know about an ICO, make sure you do your due diligence before investing in it.
ICO: How to start your own?
As said above, anybody can start their ICO. However, one thing you must ensure is that either you or someone on your team is an expert in blockchain and cryptocurrency. Someone on your team must be able to answer all the questions related to the tech part of the coin.
Next, you need to create white paper. This document must provide all the information to the minute details. This document must be informative, creative, engaging, and convincing for the investors. You might want to check out the white paper of Ethereum which is one of the most successful ICOs.
Bottom Line
ICO allows you to introduce a new crypto coin. The risk in investing in ICO is high because it is the easiest way people can scam others for money. So, if you want to introduce or invest in an ICO, you must do your due diligence.
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