An initial coin offering or ICO is said to be an unregulated channel by which a cryptocurrency “venture” raises funds. It is a means for a company or firm to publicly attract funds in cryptocurrency.It is very similar to initial public offerings (IPO) of a company’s assets, save this time around these assets or shares are being sold for cryptocurrency and not physical cash. Due to this most people settle for the term Initial Public Coin Offering (IPCO) but more often than not it’s the “ICO” we use.
ICOs And IPOs
Whereas IPOs involve the stock being offered publicly at a security stock exchange, ICOs do not involve any financial regulatory body or regulatory third party and thus there really aren’t much credibility checks done on the companies making the “offer” of sales. Now, when any cryptocurrency firm or venture wants to raise money through an ICO, it usually comes up with a plan of; what the money being raised is to be used for, what particular need the money raising project is going to meet, how much money is needed for the undertaking of this particular project, how long it will run, and how much of the virtual tokens the investors of the project get to keep for themselves.
During the process of the coin offering, people who are interested in the idea of this particular project invest into it by buying some of the cryptocoins or tokens that the firm distributes. This purchasing is done with a virtual currency. In other cases too it is a company selling actual shares or assets in cryptocurrency for the purpose of raising money for a project. Having known this let us go a bit further to look at certain key factors to consider when buying shares of ICO firms for cryptocurrency, some very successful ICOs one can invest in, the legal status of ICOs, and a major risk you need to be aware of when investing in an ICO.
What to Look Out For
Primarily you need to be aware of exactly what you are buying from the company. Basically the tokens that the company sell to you are equal to vouchers, documents or certificates that prove the transfer of ownership rights of certain assets of the company to you the buyer or investor. Since there is no worldwide framework that states what exactly what should be sold in an ICO, as a general rule of thumb anything at all can be sold in an ICO.
So now your biggest question becomes “what asset am I buying exactly?”. Unfortunately there isn’t a definite answer to this question, but there are a number of things that companies usually sell about 80% of the time during ICO campaigns. These are usually the right of ownership to an internal resource (virtual values, for instance), the right to a certain percentage of the firm’s revenue or simply put dividends, and also ownership rights to certain intellectual property of the company. The above mentioned should give you a fair idea of the kind of assets that are sold during an ICO, but you should also note that there could be many other things beyond the scope of what has being captured in here. But most importantly what you need to do is to know exactly what asset you are buying or what in particular the token you are buying is linked to because this is very key to managing whatever your money is going to be invested into.
Moreover, you need to be very much aware of who the company or firm’s partners are. This is a very key way of establishing just how credible that ICO is. Any scammer could just create a webpage with eye watering information about some next big idea of shooting your finances to the moon by participating in his ICO, only to realise you have been defrauded. Due to the fact that ICOs are unregulated, any funds of yours that go into it if lost due to fraudulent activities may never be retrieved or got back.
So how then do you establish that this particular ICO is genuine if ICOs are unregulated? You can by finding out about the various digital systems or exchanges or platforms that are ready and willing to exchange that particular company’s tokens for electronic money. This is very necessary and should not be overlooked because you could successfully buy tokens from a company only to realise that no one is willing to buy the tokens or exchange them for money. In such a scenario you end up running at a loss whose size can only be quantified by just how much of these tokens you are in possession of. Often than not companies or start-ups put information of these partners of theirs on their webpages or sometimes in their very newsletters. But typically, startups publish this information of their partners on their webpages, thus any company or start-up that does not provide such information is most definitely a no-go area.
The legal position of ICOs is largely undefined. Typically the tokens one buys are sold to him as digital goods, just as any other goods you buy online, thus it becomes very difficult to say they are illegal or not. Nonetheless, certain countries tend to regulate ICOs just like how they regulate the sale of shares and securities. One country that actually prohibits ICOs totally is China, having totally banned it in September 2017 with reason that it was “disruptive to economic and financial stability”. But some other jurisdictions just allow them to go unregulated. Due to this, ICOs sort of happen mostly within this very tiny grey area of unregulated/regulated. This lack of a definite regulatory framework or universal legal structure for ICOs emphatically implies a risk for whoever decides to invest in them.
ICOs of Today
After having spent the past two thousand seasons of your time reading about what an ICO is and what to look out for and all, how about treating you with a couple of the “hottest” ICOs available at the moment and a little information about them, should you want to invest in any of them.
This is an actual investment company that funds most of the companies that are in the cryptocurrency world. Some these companies funded by Blockchain Capital are Coinbase, BTCC, Blockstream, BitGo, BitFury, Ethcore, and also Kraken.
There are other ICOs like Humanig, Cosmos, Internet of Coins, and Aeternity. Nevertheless you should still take into consideration the various safety measures before investing in any of these ICOs mentioned.
So now, we have told you what, if we say we have told you every single detail there is about ICOs then we would have to be very big liars – because we do not have every detail of every nitty-gritty in the world of ICOs. But then having known this, every investor is definitely more than informed on what an ICO is and what to look out for before making a commitment to one. You can read more about ICOs and some new ICOs that coinstaker.com recommends for you from
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