ICO- Initial Coin Offering
An ICO (Initial Coin Offering) is the process of selling tokens (coins or tokens) of a cryptocurrency before it is created. The process has recently become a preferred means of financing blockchain-based projects: more than $ 9 billion has been injected through this process into several hundred projects since the beginning of 2017.
The way things work is always the same: the project promoters present their idea and ask the public, invited to buy tokens of the future cryptocurrency on which the project will be based. This can be an independent currency, but it is most often a token derived from an existing cryptocurrency (Ethereum, Waves or other). Some of the funds raised are used to carry out the project, while the ICO participants hope to make a profit, the token gaining value if the project is successful.
The ICO (Claim Bitcoin Zero) can be seen as an evolution of the principle of crowdfunding, the power of blockchains and more, and has many advantages.
Concretely, participating in an ICO boils down to sending crypto-currencies (often ethers) from one wallet to another. It's nothing other than that. And everything else is automated: blockchains and smart contracts memorize transactions and, when the new cryptocurrency comes into being, participants receive their tokens in proportion to their participation.
For the participant, no administrative paperwork or tedious process: just a few clicks and minutes. And this is even more true for project leaders: we saw ICOs conclude (and raise tens of millions of dollars) in a few minutes, which would not have been possible with any traditional device. The ICO is therefore the most effective fundraising device ever invented.
The process is done without any intermediary between citizens and innovators. All the data of the ICO are known in advance, and everything is written on public blockchains, searchable by all. We are far from the opacity of conventional financing systems.
With the ICO, the public judges. It is therefore a key first step in the development of a start-up, which can validate its concept at lower cost: if several thousand Internet users participate financially, it is a very encouraging sign that the project attracts and will find His public.
Here too, I do not know of any such convincing method to really "probe" the interest of the public around a concrete project.
Anyone can participate in an ICO, and invest very small sums (often starting from € 20) in new projects. Do we know many other methods to do this?
If the currency develops, the investment can be very profitable. We have seen the prices of some crypto-currencies launched by ICO grow by 1000%. An ICO is a very high risk investment, but the risk can be rewarded. While it is unhealthy to encourage speculation, it is perfectly acceptable for individuals who have taken the risk of helping a young company to be rewarded.
The ICO is a major break with venture capital, where only a handful of individuals from a very limited number of banks and financial institutions decide everything from giving themselves a large share of the capital of start-ups - and being the only ones to benefit from their success.
Both citizens and innovators have everything to gain from seeing ICOs grow. Individuals have privileged access to innovation through projects they can support from the very beginning (rewarded if it works). And the innovators can dispose quickly and without great constraint of the financial means to develop their project in good conditions.
Of course, ICOs also have their disadvantages. Yes, there are scams and fake projects launching ICOs. I myself was caught by phony projects once or twice (about thirty ICO I participated). Yes, in terms of investment, the ICO is risky. We have no guarantee and a significant number of the projects financed will either go out of business or never see the light of day. So what ? The advantages of ICO far outweigh their disadvantages. In my 25-year career in covering technological innovation, I have never seen an innovation financing mechanism that is more efficient, more democratic and more equitable than the ICO (Claim Bitcoin Zero). And the principle of ICO perfectly illustrates the power of crypto-currencies, offering radically new mechanisms, secure and without intermediaries, giving control of their money to citizens and entrepreneurs.
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