It’s important to know the basics of the industry you’re about to become a part of. And no matter if you’re a buyer or want to introduce your coin to the world, the basic knowledge is equally essential. For those who simply want to exchange BTC to ETH and those who want to create the next best crypto coin, we’ve written a short overview of the ICO term (initial coin offering.
It’s the start of the way for most coins. Some of them stay, some of them disappear. But they all go through this stage to find investors. Who knows, maybe you’ll be the one looking for those very soon.
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What’s Initial Coin Offering
An Initial Coin Offering (ICO) is an equivalent of an Initial Public Offering but in the cryptocurrency field. This is a presentation of a new coin that is aimed at finding people who could invest in it. The money is then used to actually launch the coin, application, website, etc.
You use everything there is to show potential investors that your site or coin is worth investing in. Talk about how secure it is, how easy it is to use, how convenient it’s going to convert, and how people won’t be able to live without it. The people who will invest will get a token of your crypto. You can also give them an opportunity to hold stakes in your company as an alternative.
Almost all the coins we know (EST, ETH, etc.) have had ICOs before launching.
Also read: What is Cryptojacking: Essence and Examples
Basics to Know
Here are the key points:
- Raising money using ICOs is one of the best ways to find investors for your startup;
- ICOs can be associated with stocks, but there are still differences since the place of usage is different;
- There are successful ICOs that have actually brought millions in revenue to the investors;
- But there are also presentations that didn’t perform well;
- To become a part of an ICO, you have to gain some knowledge of the cryptocurrency world (there’s lots of information online) and send some money to buy the currency;
- ICOs aren’t usually regulated, so when working with them, you have to do a lot of research and gain a lot of insights real quick.
If the coin stays, you’ll start seeing it on fast BTC to ETH converter type of services like Switchere, trading platforms, etc.
It’s not done anonymously, you’ll need your ID for the wallet and registration and verification by the service. But the fees are competitive, there are no prepaid features, both dollar and euro are accepted, and the exchange is instant. After all, it’s not a bank. If you’re looking for the lowest risk and the best crypto purchase method, make sure to visit Switchere. It will convert BTC to ETH instantly and you won’t need to pay a huge fee for it.
How Initial Coin Offering Works
If there’s an intention to raise money through ICO, the first step is to create a whitepaper with the most detailed information and presentation of the new coin/project. There should be a way to find out how much money is needed to launch the coin via ICO, for how much time the campaign will go on, and how the project will be useful.
During the campaign, you’ll find some supporters and investors that will be willing to give fiat or crypto currency to purchase your token. The strategy is similar to giving shares of your business to the people that invest in its growth. That’s why it’s so similar to an IPO.
In case the money raised doesn’t meet even the minimum standard mentioned in the whitepaper, the campaign is considered a failure. The investments will come back to their owners. If you succeed in raising money for the project, you can start fulfilling it right after the campaign ends.
Basically, your ICO is the face of your project.
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