What is ICO ?

13 Jul
Admin / 231 views

What is ICO ?

In short:

ICO is a way to attract money for your business.

ICO is for innovative startups, early-stage companies, digital companies, high-risk companies, open source networks for those who are looking for more flexibility and access to the new crypto ecosystem (such as retail investors), or has impossibility/limits to use existing models (VC, angels, fundraising platforms).

One of the many benefits of ICO are global access to funds, the new way of communication with investors, alternative infrastructure (blockchain), global secondary market, programmable tokens.

Why investors should prefer ICO to other ways of investing? Because ICO is cheap and deployed on ethereum platform which allowed to specify strict rules which can't be reversed in that way it protects investors from decreasing their stake via prevention of issuing new shares plus ICO is low friction so you can accept money from anyone.

 

In full:

ICO or initial coin offering is a way to attract investors' money similar to an IPO (initial public offering), but instead of issuing shares you issue virtual currency which later is sold to investors. Differences between ICO and IPO is that ICO, in general, has a limited number of coins (shares) in that way securing price from unnecessary fluctuations. Also, ICO is much cheaper comparing to IPO. On the other hand, IPO is a well-known technique which was a standard for a long time.

Also, IPO is for mature companies with minimum 3 years of history, size and business model (corporate governance). It provides access to investors (institutional, traditional global investors and retail investors) that live in existed capital markets ecosystem.

Shares in IPO represent part from the whole stake, which is divided between investors the same applies to the ICO. The main benefit of ICO is that investors can be sure that the company won't issue new coins thus decreasing each existing stockholder stake via stock dilution. Also, it allows companies easier to raise money, because it takes less effort to set up an ICO than to create a fully fledged IPO.

© All Rights Reserved Redux Blog