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All You need To Know About Initial Coin Offering (ICO)

An Initial coin offering (ICO), is the cryptocurrency version of an Initial Public Offering or (IPO). During an IPO. cryptocurrency ICO is a method to raise funds instead of going to a bank or venture capitalists.

Digital coupons/tokens/currencies, or as you like to call them, are issued from a decentralized accounting book, known as blockchain. Tokens are easily operated on the blockchain platform but differ from the actions of the companies because they do not have property rights.

The final point that we should highlight about ICOs is that they are not regulated. This has its advantages - companies can move faster, but also their disadvantages - the emergence of fraudulent ICO.

The ICO, as the world of cryptocurrency in general, has exploded in 2017. According to Coindesk, between 2014 and the end of 2016, $ 295 million have been raised through the ICO. In 2017, we have seen that number multiply by 7, in more than $ 2 billion collected this year.

What are investors excited about?

Before delving into why enthusiasm for ICOs, we need to cover the fact that there are two different types of ICO:

·         It is based on the creation of a digital currency similar to Bitcoin. With the intention of being able to buy products and services with it, this solves the initial problem of the distribution of the coins.

·         The second is to finance a project or piece of technology that requires the transfer of cryptocurrencies through a blockchain. This is called "crowdfunder", and like any company in its infancy, it often requires an investment to advance your project. Investing in these ICOs is similar to owning the shares of a company in which you see longevity and a clear escalation.

How does an ICO crowdfund work?

Before obtaining currency for a new project or cryptocurrency, you need a platform in order to receive these currencies.

A project or a new cryptocurrency, or develop your own blockchain or, which is what happens more and more, new currencies and companies are using the Ethereum platform. This platform allows any programmer to add applications to it, and are called blockchains in the margin. If programmers believe that the Ethereum platform can cover all their needs, that means that development is faster and integration with other currencies is easier. Once the currency has been distributed and the token sales end, it will be more likely to be available in well-known exchanges and easier to operate with other cryptocurrencies.

Disadvantages of the ICO

ICOs have a lot of advantages, to name a few:

·         Anyone can participate in an ICO.

·         The more investors, the more decentralized the cryptocurrency will be.

·         Tokens can be purchased at a low price.

·         An efficient way to increase capital.

·         It allows ICOs to move quickly.

But it also has its disadvantages. The main one is fraud. Scammers can take advantage of deregulated industry. They can develop a totally credible currency skirt, dragging investors. Take the Ether or Bitcoin inverted and not produce any currency once the ICO has finished and then disappear.

Another risk is that criminals can "hack" an ICO project and change the addresses of the portfolio, resulting in the sending of the currency to hackers.

Research of the ICO

There are ways in which you can reduce the risk in the crypto projects to invest in. The main one is to be especially alert about the ICO in which you will invest. Often, knowing who advises the projects will give you a good ICO Alert about whether it is worth it or not.

As you have seen, there is certainly a risk when it comes to getting involved in

Ico offers, but there is also a huge upside potential.

As long as I do not risk more than I can afford, then I dare to suggest that on a small scale, it is worth the risk.

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