The phrase “Initial Coin Offering” has been used so often over the past few years that people, who are not in the world of the blockchain industry, have begun to question what it means. For all those just paving their way to success in this specific industry, we have prepared all the fundamentals of an Initial Coin Offering that will be of great importance to you.
An Initial Coin Offering, or as many people know it by their acronym “ICO,” refers to the fundraising method utilized fundamentally by IT startups that want to offer services and products usually related to the blockchain and cryptocurrency space.
ICO is the crypto industry’s equivalent to an IPO, the Initial Public Offering. It means that one specific firm, which is looking to raise funds to create a new app, coins, or services, will launch Initial Coin Offering, which will be the best fundraising method.
IDO vs. ICO – essentials that you need to be aware of
When it comes to IDO Vs ICO, it’s mandatory to understand one thing. Beyond the decentralization ethos, the Initial Dex Offering represents several benefits. It is short for Initial Dex Offering for those unfamiliar with IDO, which means token crowdfunding sales on decentralized exchange platforms.
Comparing IDO and ICO, it’s essential to know that IDOs are way more transparent, open, and one of the best possible ways to launch a new crypto project than the ICO models of the past. DEX provides frictionless liquidity, lower listing costs, and immediate trading.
ICO and IDO tokens
ICO tokens happen to be very minted right after the sale, and it all happens on its website. The price is enormous since the issuer needs to have an exchange listing which may cost from $100,000 to a few million dollars.
On the other hand, IDO tokens are listed on the decentralized market right away, where the offering has occurred by their nature. For that reason, the top IDOs have less liquidity than a significant number of other centralized exchanges.
How does ICO work precisely?
To get a complete picture of the Initial Coin Offering, it is necessary to understand how it works. Once a cryptocurrency startup wishes to raise money through an Initial Coin Offering, often it creates a whitepaper that will outline what the project is all about.
It also includes the amount of money needed for the project to be completed, what type of money will be accepted, how many virtual tokens the founders will get to keep, and the period for the running of the ICO campaign.
Note that during the Initial Coin Offering campaign, all supporters and enthusiasts are buying the project’s tokens with digital currency or fiat. These particular coins are cited to the buyers as tokens and are similar to shares of a company that have been sold to investors during the Initial Public Offering.
In conclusion, it is essential to note that ICOs are similar to stocks, but they’ve got some utility for an offered product or a software service. To participate in the Initial Coin Offering, it’s mandatory to purchase a digital currency in the first place and to understand how to use exchanges and digital wallets.