by ICO or Initial Coin Offering is a form of fundraising based upon the blockchain and cryptocurrencies. The term ICO comes from the financial and stock markets. It was originated from IPO (Initial Public Offering).
As distinct from IPO, during ICO the company distributes tokens rather than shares. Later they are functioning as any other cryptocurrency. Tokens are listed at stock exchanges, their price depends on the company success, smart-contract terms, cryptomarket volatility, and many other factors.
ICO may become a good investment opportunity for both small- and large-scale investors. The tokens may be later sold on an exchange or privately.
For startups and companies running their ICOs this fundraising method allows to attract funds quickly and start or continue product development right away.
Why invest in ICO?
- Profitability. It is more profitable to invest in ICO at the early stages of the project development: many companies offer special prices. The token price tends to go up as the ICO coming to the end. Other events also influence the price of the token: exchange listing, MVP release, and even cryptocurrency market news.
- The demand for the product and its applicability. If the investor is planning to use the product in his own business – buying some of its tokens may be a good idea – it will allow cutting costs in the future.
- An opportunity to support the most relevant and useful projects. See what’s really important and support people who share your vision.
Recently ICO has become one of the most popular ways of fundraising in the IT-industry, gradually pushing out crowdfunding and other methods. In 2017 the volume of funds raised through ICO grew significantly compared to the previous year and became compatible with the total volume on the classic venture investment market. And though ICOs are considered to be a risky investment opportunity, their popularity is increasing due to large ROI figures. This is the foundation and the main reason for the ICO market growth.