What Is ICO Cryptocurrency?

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Cryptocurrency ICOs was once the biggest trend in cryptocurrency until SEC showed up. ICOs quickly became the norm after a wave of cryptocurrencies took the market by storm. Companies only had to mention that they were planning to invest in Blockchain or hold an ICO, and their stocks would rise regardless of the actuality of their statements.

The idea of presale of crypto coins and tokens has advanced into a successful instrument for raising fund for the development of an application. This article is basically a guideline and a description of what ICOs are and whether they are here to stay.

What Is An ICO

ICO is the short form if Initial Coin Offering. It is the act of crowdfunding by the use of crypto. Here’s what happens; someone offers investors units of the new cryptocurrency or token and in exchange gets other cryptos like bitcoin and Ethereum.

ICOs have been used to fund the creation and development of new cryptocurrencies. The pre-created token is thereafter traded and sold on exchange platforms when there is demand for the same.

The issue of Ether, the value token for Ethereum funded Ethereum’s development. Developers exchanged bitcoin for Ethereum and allowed investors to contribute over $18 million to the Ethereum project.

The success of the Ethereum ICO has seen its prevalent use in funding development of crypto projects by releasing token which are integrated into the project. ICOs have then become a tool that is revolutionizing not just currency but the financial system as well. We are approaching a time where they are becoming securities and shares.

Funds raised as a result of the Ether token went into developing the Ethereum Virtual Machine (EVM). The machine is now part and parcel of the Ethereum platform and allows the development of smart contract applications. Ethereum has fast become the choice platform for ICOs. Anyone can crowdfund new projects without the use of third parties. For the Ethereum ICO, all you need is a smart contract, set a number of tokens and price pegged around bitcoin and Ethereum.

The History Of Initial Coin Offering

Ripple was the first cryptocurrency to issue an ICO. Back in early 2013, the cryptocurrency developers created a Ripple payment system that created a 100 billion XRP token. They sold these tokens to fund development of the Ripple platform.

Later the same year, mastercoin promised to create a layer on top of bitcoin that would tokenize bitcoin and execute smart contracts. The developer sold a million tokens against bitcoin and received $1mio.

Other cryptocurrencies that have developed from ICOs include Lisk which sold its coins and garnered $5mio in 2016.

Are ICOs Scams?

Let’s address the elephant in the room, are ICOs scam? Unfortunately, some are. You have to be careful. Their upwelling in 2017 and 2018 has attracted scammers and shady people that have been involved in the trade.

Pincoin is an example of the scam ICOs that have defrauded crypto enthusiasts. Developers disappeared with over $660 million and left thousand angry at their Vietnam headquarters. Other scams include Arisebank, Seele and Benebit among others.

So, can you make profits investing in an ICO? Definitely. Can you lose money investing in the same? Absolutely.

1 Comments

  • Marketing Your IEO • Daily Ico News

    May 21, 2019 - 11:43 am

    […] Initial Coin Offerings (ICOs) have fallen out of favor with crypto investors. The perceived and inherent risk of investing in ICOs and the high chances of being defrauded have discouraged potential investors. Some reports say that over 70% of ICOs in 2017 were fraudulent. But that’s in the past now, a new form of crypto crowdfunding has emerged. […]

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