With the rising excitement in investors about cryptocurrencies, new crypto-ventures have started to come up in numbers much larger than expected. But every organisation needs an initial financial hold to support its workings. How do they raise these funds for a cryptocurrency company? The best answer to that question, at this moment, is by launching an ICO.
ICO, short for Initial Coin Offering – is the biggest trend in cryptocurrency market today. These are launch for investors to trade a new cryptocurrency with some existing ones like Bitcoin or Ethereum or their own crypto-token, in order to raise funds. Crowdfunding is basically used to create funds for a new cryptocurrency. It can be regarded as a replica of Initial Public Offerings in stocks. ICOs may not necessarily be opened just for a new cryptocurrency.
(Caption : The future of fundraising)
Companies consider launch ICOs at the start of a new project that could get help raising funds through crowdfunding. These are used to assist with the development of new crypto-project by releasing a token or coin linked to the project. The first cryptocurrency to be distributed using an ICO was Ripple. With Ripple Labs creating 100 billion tokens in 2013 and selling them, they could generate funds for the development of the Ripple platform. Later on, with the success of the Ethereum ICO, these have shown potential to come up as a revolution in the financial system. Who knows, they could take the place of shares and securities in the future.
Solid Returns
The profit ratio from these ICOs can prove to be staggering. For example, during the Ethereum ICO, ether was sold at 0.0005 Bitcoin, but at the end ether’s value was 0.05 BTC – this amounted to an astonishing 10,000% profit. The Ethereum community also experienced the Gnosis ICO which became a decentralised prediction market on Ethereum. The stakes on this ICO were high, as it was developed by an Ethereum developer and hence, attracted a lot of attention.
Moreover, the launch of EtherEx, an eagerly waited decentralised crypto exchange is another aspect that is adding to the curiosity about ICOs among investors. Another cryptocurrency, Augur (REP) was sold for 0.005 BTC per token. It went on to reach heights as high as 0.04 BTC. In general, a successful ICO is expected to show a 100% to 500% profit.
The Road Ahead
With the scale of profit and funding that an ICO brings in for an organization, more and more companies are creating their own ICOs to promote their coins as well as raising funds for their cryptocurrencies. The total number of cryptocurrencies available as of April 2018 is 1565.
Amidst this competition, it could really be challenging to set up an upscaling business. Yet the interest in investors for cryptocurrencies is helping these organisations gear up for even more ICOs. You just need a white paper that tells the investor how your cryptocurrency could be the project that brings in interest, and you are ready to go. Does it look like an era where fundraising might just mean forging an ICO? It’s pretty likely.
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