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What Are The Benefits Of An Ico?

By Author: Oryxiann
Total Articles: 1

It’s always a tedious task to raise funds for your new business. The tiring processes involving the regulatory clearance forces startups to look out for some other feasible options. Startups can definitely raise funds through crowd funding, equity based funding and debt based funding. Initial coin offering (ICO) is simply crowd funding campaigns where contributions are made in the form of crypto currencies. It is essentially a fundraising tool. At first, a startup can create a new crypto currency via a number of different platforms. Soon after that they can eventually organize a public ICO where retail investors can buy the new digital tokens. This will pay for the coins with other crypto currencies.

ICO token is your contribution to the startup investment. You’ll receive more tokens by contributing more amount of money. With the help of these tokens you can buy future company services or can sell the tokens which you have. Thus, ICO has become a tool which will revolutionize the entire financial system. There are chances that the ICO tokens would become the securities and shares of tomorrow. You’ll have to keep in mind that investing in ICO won’t let you have an ownership stake of the company you’re giving money to, unlike Initial Public Offering (IPO). Actually you’re gambling with your worthless currency which you believe will increase in worth and make you rich in the future. If you buy shares in a public firm you will only own a small slice of it. But, ICO promises that the coin can be used on a product that is eventually created. But, let’s hope that the digital token will rise in its worth and can then be traded for a profit.

ICOs are similar to IPOs and crowd funding. In order to raise money for the entity’s operations during an ICO operation a stake of the startup or company is sold, like in IPOs. However, while IPOs deal with investors, ICOs deal with supporters that are keen to invest in a new project much like a crowd funding event. As the technology matures and the market gains more experience with the concept and as investors become more sophisticated, the quality of the tokens and the viability of the business models are likely to improve.

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