You may have heard of the phrase initial coin offering or ICO and you will have undoubtedly heard of the cryptocurrency industry. Many people are making money from the cryptocurrency industry, and businesses are now turning towards it to find funding through ICOs.
As you will find out in this article, an ICO is a form of startup funding that uses newly created cryptocurrencies to generate cash for a new business venture.
What Is An ICO And How Can A Business Use It To Generate Funds?
ICOs are somewhat similar to IPOs (initial public offerings), but no shares or stake within a company is purchased. An investor purchases instead a new type of cryptocurrency created by the startup business.
There are several steps involved in an ICO:
- The new business formulates a new cryptocurrency and documents its usage and plan in a whitepaper
- This cryptocurrency is released to the public in an ICO
- The public can purchase the new cryptocurrency in exchange for fiat currency or other cryptocurrencies
- The business then uses the funding to implement its project and grow its ideas
- As the value of the new cryptocurrency grows, investors may sell it for profit
So basically, a new business uses this cryptocurrency as an integral part of its plans. For example, a streaming company might create a cryptocurrency that customers use to purchase videos and music. The business receives funding as the public purchased the initial offering of this new coin.
Investors can then potentially make a profit if the company is successful and the value of the integral cryptocurrency increases over time (much in the same way that stocks and shares increase in value).
Which ICOs Have Seen Huge Success?
If you are considering investing in cryptocurrency, then this could be the way forward. Many ICOs raise a huge sum of funds in a short period of time and go on to start successful business ventures. To prove our point, the following are three examples of ICOs that have succeed beyond their wildest dreams.
Ethereum – This is the most well known example of how powerful ICOs can be. Ethereum is now the second most powerful cryptocurrency in the world behind Bitcoin. It is primarily a cryptocurrency but it also offers other features such as smart contracts. Btxchange.io shows that Ethereum’s ICO raised huge sums of money, and the ROI is now rated at 230,000%.
Ark – This is a decentralized organization that uses blockchain technology and a SmartBridge ecosystem. Its ICO saw investors eager to get in on the act and they made a whopping 35,400% gain on the original value of the cryptocurrency.
Lisk – This is another startup using blockchain technology that helps developers create apps and run them on “sidechains”. Programmers love Lisk and it also had support from Ethereum. Its ICO managed to raise $5.8 million in less than 4 weeks!
As you can see, ICOs can really bring in huge funding for a new business, and if you have technology based on blockchain or or a new cryptocurrency, then this way of funding could be the answer!
