The explosion of the cryptocurrency phenomenon has brought with it that of the ICO, which undoubtedly represent a new frontier in the modern economy. For those who still do not know the abbreviation ICO stands for “Initial Coin Offering”, or literally “initial money offer”. In practice, this is the launch of a new currency on the market, in the specific case of a cryptocurrency. Concretely this practice allows to finance projects through the sale of a still non-existent currency. In a nutshell, by participating in an ICO, the offer team is offered funding for a project, obtaining in exchange for tokens, or a new cryptocurrency, usually at the base of the project itself.
The ICOs have attracted many investors in the field of virtual currencies, as they allow in fact to obtain coins not yet existing at absolutely advantageous prices. On the other hand, however, there are risks to say the least huge, in fact the project or the money that you finance could be a failure and even there is the risk of running into a scam and then seeing their money disappear. In this regard certainly does not help the lack of regulation in the field of cryptocurrencies and in an uncertain situation as that of the ICO the weight of this lack becomes even greater.
THE OPERATION OF ICOs
Through the ICOs in fact you can buy coins that do not yet exist. In most cases it is possible to invest exclusively through current cryptocurrencies, in particular through Bitcoin and Ethereum, however there are exceptions. ICOs are usually structured over time with purchase prices of the launching currency that gradually increase. In the initial phase, therefore, prices are absolutely cheaper, but the risk of a failure of the ICO itself is greater. In addition, in some cases to be able to buy in the initial stages of the sale it is necessary to have registered in advance. Generally an ICO presents a soft cap and a hard cap, which respectively represent the minimum and maximum objective of fundraising. If the soft cap is not reached the ICO could proceed in different ways, ranging from the return of the money until the marketing of the few coins sold. Each ICO also presents a whitepaper, which is a document which explains all the individual aspects concerning the project and the new currency. This is a fundamental aspect in the evaluation phase of a possible investment. Another fundamental aspect in terms of earning is surely that of the road map, which describes all the key points and objectives that the project aims to achieve in a precise moment.
At the end of the ICO, which can arrive at a fixed date or once the hard cap is reached, the new currency is effectively launched on the market and therefore becomes freely exchangeable and tradable through some exchanges. Obviously the timing of these proceedings could vary from case to case.
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