These days everyone is talking about ICO and IPO. What are they? Here’s what you need to know
Initial Coin Offerings or ICO is the most modern way by which the companies are raising fund for development. It is a blend of the advance techniques along with the conventional ones. Much of technology is used when any ICO list is released and thus it is expected that the investors will get free of extreme risk, provided that they are a little bit careful.
Collection of ICO
ICO list contains the name of the new crytopcurrencies that are issued by the developers. The process of ICO is that few offerings are given to public when any new crytpcurrency is issued. In exchange of the new Offerings one has to invest Bitcoins or BTC or Ether (ETH). The fund is collected through the two most popular crypto coins and they are shown on the web page. The total process is almost similar to opening a new bank account.
When talked about the legality of ICO it can be mentioned that its legality varies from one nation to another. While at some countries like China cryptocurrency are not legal and at others it is. It is a way to collect fund through crowd funding. It helps in gathering the capital fund that is required for executing any project. As already mentioned at any particular ICO the cryptocurrency that is to be issued is exchanged in return of other crypto currency. The investors takes the newly launched crypto currency and also get involve in some feature associated with the project that is launched.
Similarity with IPO
Initial Public Offerings or IPO is a process that is almost similar to ICO. In it the investors invest in the shares of any new project or company. In return they are the shareholders of the company, i.e. they get ownership. In case of ICO the investors invest in the coins and when the business grows the value of the coins hold by them increases.
It must be remembered that IPO is normally done by any settled company, while an ICO list is issued by companies who are new. It is risky and vulnerable to threat. Before a company can list their shares through IPO they have to fulfill certain conditions which is not required in case of ICO. The whole process for issuing ICO is shorter in comparison the process of IPO. The latter is more complex too.
Process of ICO
The main purpose of issuing ICO is completing any project that is mainly cryptocurrency based. They mainly rely on decentralized techniques. Thus, the concept of ICO is feasible for those type of investors who have keen interest in cryptocurrency and are convenient in suing technology for investing. Any documents that are given to investors are in the form of white paper, webpages or web post. In some of them one can find exact details about the project while there are some other that may not contain the details. Some of them are fake too. Thus, investors needs to be very careful before they invest. If possible it is necessary to go through the white paper to learn about the new crypto currency.