What is ICO- Initial Coin Offering| Paroexchange

An initial coin offering is a type of funding using cryptocurrencies. Mostly the process is done by crowd funding but private ICO’s are becoming more common. A quantity of cryptocurrency is sold in the form of tokens to investors , in exchange of other cryptocurrencies such as bitcoin or Ethereum . the token sold are promoted as future functional unit of currency or when the goal of ICO crowd funding meets the project launch.

An ICO can be source of capital for startup companies. The ICO have been truly revolutionary and have managed to accomplish many amazing tasks. Anyone can invest in a project they are interested in by purchasing the token of that particular company and become the part of that project themselves.

Since 2013 ICO’s are often used to fund the development of new cryptocurrencies. The pre-created token can be easily sold and traded on all cryptocurrency exchange if there is demand for them.

Source: Hacker Noon

Why will a startup company prefer ICO?

The concept is relatively new and it is quite safe. Some benefits of ICO are:

1. You are not sharing your company with an investor that is huge difference; you will get money but still control your business.

2. Before companies needed to go door to door to find investors, with ICO you can immediately rise money from anybody in any country worldwide

3. Another huge reason why companies are choosing ICO is to reserve shares. By selling tokens, companies choose ICO to save shares for future rounds.

ICO allows an easier entry for startups to raise funds for their ideas. Raising funds from capitalist and banks can be challenging process and many attempts can be rejected. Even if you project is to innovative or can change lives. However through ICO anyone who believes in your venture can buy tokens to support. Unlike traditional way of funding, you don’t have to be depend on capitalist or any bank. ICO are not determined by banks. It gives the company complete freedom to grow, express creativity and expand how much ever it wants.

High risk

In the world of internet, information is easily accessible. Almost everybody knows of the high risk in ICO. You see all this companies coming up with whitepapers and promises. After raising funds, some turn out to be scams, Although you have to do a lot to prove that your project is not scam. You have to accept that not everybody will back your ICO. Keep focusing on proofing your project.

China has banned ICO due to many scams going around. China will not be only one country if the number of scams keeps increasing. Whether you choose to ICO or stay on the safe of capitalist funds, important factor to take note is that your product has to work.