Initial Coin Offerings (ICO) is a means of crowdfunding through cryptocurrencies for funding blockchain based startups. Investors either corporate company or individual can invest in an ICO through cryptocurrencies like Bitcoin, Ethereum etc. In return, they either get the percentage of the company shares or services / products as it all depends on the type of ICO or tokens up for crowdsale.
When Ethereum was launched in 2015, its value was in between 0.46 - 0.61$ and now it’s more than 456$. ICOs have become hot than they were ever before. The positive shift in ICO investment started in 2017 and the growth inclination is visible this year too.
ICOs are popular for many reasons, here is what we like about ICOs.
1- International reach
From entrepreneur point of view, it provides reach to international investment markets without much of legal delicacies involved as in IPO. In IPOs, a company can only issue its stocks in a registered country. ICO community building if done properly an ICO can easily reach its capital mark within the set time period.
2- Easy approach towards fundraising
Traditional venture capital involves long complex processes which require services of third part for legalities. Whereas ICO smart contracts
solve this problem easily. There is no need for hiring third party for verification instead a blockchain network verifies the information of the sender and the receiver.
3- Anyone can initiate ICO
Customized tokens can be developed through number of options such as Ethereum, Stellar, Waves, Counterparty etc. Initiating an ICO has become easier with so many options at the disposal. Else, hire ICO expert
who can do the rightful job for you. Transaction costs related to contribution settlement and marketing is lower than IPOs.
4- ICOs are fast and secure
ICOs are based on blockchain network which is distributed ledger where there is no central authority. This means, the network is incorruptible. Each transaction block is verified and connected to the other one in the form of a chain. Also, ICOs are fast for raising funds rather than IPOs where fundraising takes years.
5- Democratization of investments
Financial hubs as we hear, Silicon Valley, New York City and London - are considered as venture capital places but with ICO anyone from any location can participate in ICO token crowdsales. ICOs can literally raise money from any geography as it generally allows everyone for participation. That’s the best part of ICOs. Also, this makes fundraising easy.