What is ICO and why it is conducted
ICO, or Initial Coin Offering (IPO tokens) — a release of any project coupons, or tokens that is intended to pay for the services of the site in the future — in the form of cryptocurrency.
Thus, in contrast to IPOs, buyers of the currency did not receive a share in the company and can not affect the internal managerial decisions. Actually ICO is another implementation of the crowdfunding model, when participants are funding the development of the company now in order to get her some good in the future.
For example, tokens of the Storj project — Storjcoin X you can buy a certain amount of disk space to Storj or to increase the throughput bandwidth. Also tokens you can earn through the rent a certain space on your hard drive.
Releasing their own "money" and exchanging them for one of the most common cryptocurrency (such as Bitcoin or Ethereum) or even in real currency (dollars, euros), the project can secure the funding needed to launch or development. In addition, releasing the currency for a project, you can speed up its development (how the introduction of money in ancient times, increased turnover) and automatically solve the problem of future monetization.
Why everyone is talking about it
In 2017, according to Smith + Crown during the ICO has already attracted $180 million — more than in all 2016 ($101 million). And the volume of borrowings is constantly increasing.
Someone said about the transition to the new economy, the state and Central banks, as always, concerned with issues of control and anonymity, and someone points to the fact that many have already passed through ICO projects turned out to be fraud schemes.
The author of the article in CNBC compares the boom in cryptocurrency markets and the growth of the fashion ICO with the explosive growth of shares of companies of the Internet industry in 1999 and its dotcom IPO. This comparison is quite true: like the Internet, cryptocurrency is just a tool. As in the case of Internet companies, many of the projects coming to ICO, just trying to capitalize on the excitement around the new theme. Others, however, offer interesting solutions that quite possibly will change the face of some markets.
Why invest in tokens, released on ICO
Buying tokens issued by the project investors expect:
To benefit from the resale of tokens at a higher price in the future (assuming they will be in great demand — for example, because the project "shoot").
Use your coupons in the future, having (as is assumed) services at a lower price.
Support for the project.
If ICO is another model of crowdfunding, how can I be sure that I will not be deceived
There is absolutely no laws governing the conduct ICO, — no country in the world. ICO on the part of the buyer — a transaction based on trust. As in the case of crowdfunding, the project may not live up to the stage of the appearance of the product, or, having appeared, may become an complete disappointment. Finally, some enterprising crooks can just deceive you, after ICO for the project that they were not going to develop.
Cryptocurrency enthusiast and head of the office of Runa Capital in San Francisco Nick Tomino in 2016, pointed out in his blog on the irrational behaviour of many investors during the ICO. Projects having more than just a website, and sketched on the knee the concept of business models has attracted several million dollars in a matter of hours or days — while working a lot of really promising projects with cash flows and customers are unable to attract a similar amount.
Tomino believes that good project must:
To prove to potential investors the validity of the conduct of the ICO and the validity of issuing its own cryptocurrency.
To reveal the plans for the development of the project and to maintain an open dialogue with potential investors.
To implement a test version of the native Protocol to ICO.
To provide the possibility of direct "production" of the currency to engage new users and provision the network resources required for transaction processing.
To go to the ICO with a clear understanding of what amount you need to attract.
Team founders must own from 10% to 50% of all tokens and must not exchange them during the first three years of operation.
Some of the projects, the conductive ICO, involve a third party — a kind of referees who can count on the trust of investors by serving as a mediator between them and the projects. Other form of legal entity and associate yourself with limited capacities of the expenditure of funds received through the ICO.
It is also the disclosure of the identity of the key participants in the project (of which at least part is usually active participants in the cryptocurrency community), nor any significant ICO is not complete without a published description of the idea, the business plan project development and publication of expert assessments.
The vast majority of projects attract investors under the banners under the slogan "a decentralized X will create Y". Is there any advantage to the decentralization of this service or tool, what it is, can the company compete with their centralized counterparts, gaining momentum — this is probably the most important questions that should ask yourself future buyers of tokens on ICO.
How to find a project for investment and to participate in ICO
To invest in any project directly on its website, however, you need to have a wallet with bitcoins, esters or other cryptocurrency, and also to be able to carry out transactions. To make a wallet can be, for example, here — then it all works roughly as with any translation system or in the Internet Bank.
Information resources where you can find projects, conducting ICO, many already mentioned Smith & Crown, Alert the ICO and others.
AngelList and Protocol Labs recently decided to launch a new site Coinlist — a specialized platform for the launch of ICO, for which they, in particular, are working on contract base (and, of course, it will carry out the screening of projects) — it's unclear who will be able to invest, but for the inexperienced investor it will definitely be a more friendly solution.
How to conduct a ICO for your project
To make it easy, for example, here. That is, if you want to play. Harder to understand is why you actually might want.
If still needed, it is likely that most of the time you still spend, developing and selling the project, and not preparing for the release of ICO. Besides, all the "quick" methods involve the creation of currency, the mechanism resembling that of bitcoin, which, let's say for the sake of brevity, there are certain disadvantages when you want to create a "project" currency (bitcoin, generally speaking, as one of the first experiments of its kind, has in its mechanism a number of inherent flaws that developers hope eventually to correct).
If you want to issue coupons like "one hour of help around the house", or cut paper, or learn to code — this homegrown monetary system you most likely will not help.
What are the most loud ICO have been in the last time
During ICO cryptocurrency Ethereum project in 2014 was the outstanding one of the most popular cryptocurrencies today — Ethers (ETH ethers). During ISO ether sold at a price of $0,3–$0,4 per unit, by July 2015 the price has reached $20, and today the exchange rate of the ether exceeds $200 per unit currency, and the total capitalization they are second only to bitcoin.
The first ICO in history was the release of Mastercoin tokens in 2013. Mastercoin has worked to develop financial services using bitcoin as the basis. In 2014, another project, MaidSafe, embodying the idea of a decentralized and protected from hacker attacks and government restrictions of the Internet, has attracted nearly $6 million by collecting money in mastercoach and bitcoin.
In may 2016 DAO (Decentralized Autonomus Organization), decentralized investment Fund, built based on the technology of Ethereum, has raised more than $150 million in its investment campaign. Subsequently, the hackers could use the vulnerability in the code of the DAO and to withdraw from the accounts of the organization for about one third of its funds (or about $40 million).
The team of programmers working on the Ethereum project, intervened in the operation of the network and recovered most of the money stolen by hackers. However, the group of users unhappy with this intervention, undermining the principles of creating Ethereum, left the project and created its own currency based on Ethereum — Ethereum Classic.
Many projects, however, has failed — as it often happens, after the ICO. Dogecoin can not restore his reputation and return to those heights ever since, as the founder of the exchange platform Moolah, Alex green stole the money of customers of the platform and disappeared.
Josh Garza to launch PayCoin, the platform, promised in the white paper become a revelation for cryptocurrency market, actually, which is yet another clone of bitcoin, has repeatedly made promises about the development of PayCoin, which could not perform, and also made statements not corresponding to the truth — as long as they are not interested in the police and he did not have to leave the United States. 1 June 2017 Garza pleaded guilty to the crime and now he faces up to 20 years on charges of fraud.
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