What is ICO?
The acronym ICO stands for Initial Coin Offering, that is, the initial placement of coins (tokens). During the ICO team project selling digital tokens for cryptocurrencies or Fiat money among investors. Later these coins can be used on the platform project as the local currency or traded on exchanges. ICO is also often used the term "krusel" (eng. — crowdsale).
What the purpose of the projects is carried out ICO?
Releasing your own tokens and exchanging them for the popular cryptocurrency (e.g., bitcoin or Ethereum) or Fiat currency (dollars or euros), the project attracted funding needed to launch or development.As a rule, ICO are in the early stages of projects, to the creation of their full infrastructure. The funds raised go towards funding the final stage of development, marketing or sent to the special development funds to support projects in the long term.
What is the legal status of the ICO?
Now the ICO cannot be termed as legal and illegal way of attracting investment. Its legal status, the procedure and requirements for the companies that are going to attract funds not currently identified in any country in the world.In addition, it is difficult to determine the legal nature of relations arising in the course of ICO. Because financial relations in the classical sense, such relationships are difficult to call. At the same time, it's safe to say that the basis of this process is the reputation of the people behind the cryptocurrency startup, and the trust of users (potential investors).
Is it possible to compare ICO IPO?
When a company wants to offer its shares to the General public, it conducts an IPO (Initial Public Offering – the IPO on the stock exchange).ICO can run on the same principle: investors, investing, receive a "share" in the company in the form of cryptographic tokens. While the ICO has similarities with crowdfunding: funds usually are going to implement a certain idea, that is, at the stage when the project has no final product.
At the same time, the IPO is subject to national legislation. For example, in the US for public offering of shares, the company must be incorporated as a joint stock company and registered with the SEC (Commission securities and exchanges). All this makes the process of attracting investment into the project at an early stage of its development more complex, but provides certain safeguards to investors.
In the case of ICO, the process of attracting investment is much easier, but users are not insured.
What attracts investors to ICO?
Buying offered on ICO tokens, investors especially look forward to:
To benefit from their sale at a higher price in the future (the classic example Ethereum, whose tokens during the ICO in the summer of 2014 cost less than one cent, and today the price went up to almost $400);
To use the tokens for its intended purpose, received the claimed services at a lower price.
What are the risks in participation in ICO?
Perhaps the biggest risk can be called a common Scam, the creators of the project have only one purpose: to collect user's money.In addition, because of laws that would regulate the conduct of cryptocurrency krautsalat, at the moment does not exist, from the perspective of the investor, this transaction is always based on trust. We can not exclude that the project may not live up to the stage of the appearance of the product, or to disappoint the investor in its implementation.
In addition, in its current form, the ICO, as a rule, held in one round, and the chance to get additional funding from them is small. This can also be considered as a potential risk from the point of view of long-term existence of the project.
What you should consider before participating in the ICO?
The abundance of different ICO can confuse many inexperienced investors. Therefore, it is first necessary to carefully examine the agreement to sell (Token Sale Agreement). Upon reading this document can float to the surface some interesting details, which the organizers of the ICO may not publicly stated.In addition, there are implicit indicators of fair intentions of the project:
Availability of all necessary agreements and rules are published on the web site as a public offer.
Ready working prototype.
Properly drafted the whitepaper and the remaining documentation.
The presence of escrow (special contingent account, which keeps records of property, documents or funds until the occurrence of certain circumstances or performance of certain obligations).
The incorporation (registration) of the company.
Spotless reputation of the people behind the project.
What were the most successful ICO?
The success of the ICO – a thing quite conventional. However, a generally accepted indicator is the amount of money raised. In this respect, leadership in the moment (we're talking about dry statistics, swinging to the side other possibly controversial aspects of the campaign) belongs to the Bancor project, which in June 2017, less than three hours brought 396 720 ETH.An example of another swift krautsalat was the campaign innovative browser Brave: approximately 30 seconds, the project was able to achieve financial goals and to raise $35 million.
In may 2017 the list of successful cryptocurrency of krautsalat added to the Storj project ($30 million in less than a week) and Aragon – just 15 minutes since the start of the ICO project has collected the planned 275 000 ETH (about $25 million).
You can also recall the projects mobileGo ($53 million), Gnosis ($12.5 m for 10 minutes), Future Capital ($10 million over two hours), Aeternity (23,4 CHF) and finally leading to malfunction of the Ethereum project Status ($100 million).
Also do not forget about already become part of the history of the cryptocurrency world project the DAO, the collapse of which in summer 2016 appeared Ethereum Classic.