An initial coin offering (ICO) is a popular innovative option for start-ups to collect funding for the development of services usually associated with cryptocurrecies or blockchain-based offers. It allows stakeholders to acquire newly-issued tokens. They may feature some usefulness associated with the products or services that the business is delivering, or they may just present a project share.
There are two divisions of ICO: private and public. Let’s determine the dissimilarities between them.
In private ICO, only a bounded number of selected members can take part in the process. As a rule, only professional participants (financial companies or high net-worth persons) can become participants in private ICOs, and a company can decide on establishing a minimum investment amount for them.
This is a category of crowdfunding that is open to the public. It applies rather democratic approaches to raising capital, offering practically everyone an opportunity to become an investor. However, it is often the case that in light of regulative concerns, private ICOs are becoming a more viable variant in comparison with public offerings.
ICO activities started to decline to a certain extent in 2019; the issue – not being covered by the law and accordingly, not having any guarantees. So, participants can do their analyses and consider projects to contribute to.
ICOs can make some buzz, and there are various platforms where stakeholders talk about new projects. Given the fact that they are practically unsupervised, it is wise to be cautious when contributing funds.
There are no warranties that a participant won’t be out of their funds when contributing to a project. To help bypass scam projects, you can do the following:
It is often the case that ICOs with tremendous returns on investments are not the projects that collect the most money, and vice versa. The sums collected by ICOs were the highest in 2017 and 2018, however, over the year have declined. But in terms of assessing the success of a project, you can take into account both the sum of money contributed in the ICO and the gains produced on contributions.
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