Now there are dozens of crypto-currencies with a capitalization of hundred thousand dollars, and new ones appear more often. In the world of young crypto currency, there is one type of transaction, the essence of which is very important to understand – the so-called “initial coin offering” (ICO).
ICO is similar to initial public offerings on stock exchanges, which takes place in reverse order. Alas, the situation is further complicated by specific legal procedures and players who use unethical practices. But, although the essence of this procedure is confusing to many, it has recently been considered most preferred way to launch new crypto-currencies. So, let’s see what ICO is in the modern crypto currency market. What you need to know about ICO is that it is a fundraising tool based on the exchange of new crypto currency for liquid counterparts with a known value. You give your bitcoins or ethers, and in return you get a number of regular super-duper coins.
Coins placed in the course of the ICO are in fact digital coupons, tokens, each of which corresponds to an indestructible record in a distributed account book, or a blockchain which the first crypto currency, bitcoin, is based on. This means that they can easily be exchanged, although unlike shares they do not grant ownership. Investors hope that successful projects will increase the value of such tokens.
An increase in the value of crypto currency is crucial to understanding the essence of the ICO. Investors buy them not from personal likings. These are the investments made in search of quick and high profits.