As of now, ICO is already a multi-trillion dollar space. It has already crossed a total market capitalization of over $100 billion. An ICO is a type of capital-raising activity in the cryptocurrency and blockchain environment.
Just like any other traditional ICO platform, Kyodai Global is also extending its Kyo coin to help its investors. Lesser-known, currently, ICOs can be reliable in raising large investments and ensuring minimum information transparency. Let us move on further to understand more about ICOs, types, working, and potential benefits.
What is an ICO(Initial Coin Offering)?
If you have heard of an IPO(Initial Public Offering), ICO is quite similar to that. Both the processes primarily focus on raising capital for the company.
On ICO Platforms, investors will acquire tokens or coins “cryptocurrency” in exchange for money investment on the platform. It is basically a type of crowdfunding projects through creation and sale of digital tokens or coins to raise money for future projects as outlined in the whitepaper.
The ICO tokens or coins function like a currency that provides investors a special access to the project. It helps in launching future projects which would be otherwise tough enough to finance in a traditional way.
What are Tokens?
In ICO, capital is raised for the future projects by issuing a token or coin on a blockchain then distributing them in exchange for a final financial contribution. These tokens are then further transferred to the exchange networks and on different platforms to provide investors with special privilege and to help them enjoy their digital wealth in their daily life.
What Are the Key Features of an ICO?
Some of the key features of an ICO includes:
- To get engaged in a project, Decentralized Autonomous Organization or an economy.
- A coin ICO sells participation in an economy whereas a token ICO sells a right of ownership or royalties to a project or DAO.
- Majority of ICOs engage in the creation of a defined number of coins or tokens before the sale initiates.
- The creators of the ICO or DAO define or you can say fix the rates.
- ICOs may have multiple rounds of fundraising for projects resulting in increase in value of coins or tokens.
- Once the coins or tokens are open in the tradable market, the ICOs conclude.
What is the Work Process of an ICO?
The working flow of an ICO is not too complex. There are 4 main steps of the work process of an ICO. Review them:
Pre-Announcement- This is the very first step of the workflow of ICO. Start creating hype by just spreading the word about the launching of ICO amongst your potential audience. The launching announcement protrudes the summary of the project goals in whitepaper. Simply put, it includes features of the project and acting team members(their experience and track record), which is capable enough to attract potential investors.
Offer- This is the second step where an offer is displayed that weaves together the essential terms of ICO, the targeted investment, and the deadline for the existing ICO. It will also indicate the financial instrument to be sold during the ICO, normally tokens. The financial instrument will have a value assigned to it, together with the rights of the investor along with the expected period after which the company will commence returning earnings to investors, traditionally by way of dividends. Once the offer gets authorized, the start date is also made public.
An active marketing campaign- During the start, no one is potentially familiar with the ICO launched. Thus, it’s better to start with a marketing campaign so that the audience gets aware of the ICO. Your company might hire a specialized agency to promote the ICO coin via another tactic. The investors in crowdfunding programs are the ones who participate most actively. Once the marketing campaign gets over, the trading(buying and selling) of the tokens commences.
What are the Probable Benefits of an ICO?
ICO offers many inherent benefits to the investors, so as to attract them towards itself. These are:
- A chance to buy cryptocurrencies at a minimal price in the hope of getting good returns on their investments.
- Sometimes, ICOs come with exceptional rewarding benefits. For instance- revenue distribution or privileged access to products, projects shares, and services.
- You will be able to give support to the team or projects as per your will.
For ICO Companies-
- With lesser regulatory constraints, get quick access to seed funding.
- Acquire funds without the loss of any equity.
- Be on a winning side to effectively experiment with decentralized business models.
- Win an initial user base who wish to test the services.
- No direct taxation regulations on DAO, project, or economy.
In the end, all you can say is that ICO is exceptional and remarkable in itself to raise money. And, almost everyone is trying to embrace their wishes by trying this new thing. However, if you are willing to launch or want to participate in ICO, it’s better to understand such things beforehand to avoid any unnecessary stress.
Recommended Read: Why KYC is Necessary for an ICO Transaction?