ICO Cryptocurrencies What is It?
Cryptocurrencies and platforms for working with them, exchanges, are attracting the interest of people more and more day by day. Trading on cryptocurrencies is almost no different from trading on traditional exchanges, with the difference that not every cryptocurrency exchange works with real (fiat) money. Apart from this, of course, important option, the attractiveness of cryptocurrency exchanges is due to many other factors, starting from security of transactions, speed of their execution and ending with such an important advantage as the number of available currency pairs for exchange. And it is thanks to ICO, new coins appear in the cryptocurrency market, which becomes one of the factors that lead to sharp jumps in rates of already existing currencies (we do not observe such situations in traditional markets). Considering all of the above, we advise you to pay careful attention to choosing a cryptocurrency exchange.
Read more about what an ICO is, as well as the most striking events below.
What is a cryptocurrency ICO?
An ICO of cryptocurrencies is a way to attract investment by selling an initial stock of new cryptocurrency coins on the market. Usually such an initial stock is formed as a result of the first issue of new coins. In fact, cryptocurrency ICO is a new form of crowdfunding, where investments can be directed to any projects, but most of them go to the development of a new cryptocurrency project or other projects based on blockchain technology (detailed at BrokerMan).
The term itself came to the cryptocurrency market from the stock market and is analogous to IPO – initial public offering of company shares on the stock exchange. Since its inception, cryptocurrency ICOs have placed two types of tokens on the market:
- Dividend – giving its owners the right to receive future profits from the project of a new cryptocurrency;
- Utilitarian – tokens in such projects act as ordinary cryptocurrencies and do not provide any additional rights to their owners.
Recently, the cryptocurrency ICO market has been developing towards purely utilitarian tokens – the overwhelming majority of such projects in the market testifies to this. The reason for this is that the legislation of some countries of the world in the case of providing tokens with additional rights to the project’s income in the future treats such instruments as exchange ones and requires such projects to be accountable to the regulatory authorities.
The process of entering a new cryptocurrency at the ICO takes several stages:
Stage 1: Announcement.
The authors announce the general vision of their project to the public, hold conferences, meet with potential investors, answer questions, and write articles and notes. The goal of this stage is to find out the market’s interest in the potential project and to form the details of the project.
Stage 2: The offer.
The project must receive a company-owner and legal registration in the form of an offer. The offer is an official statement of the legal entity with a description of the project, timeline, conditions and everything else. The project gets its own website and official pages in social networks.
Step 3: Advertising.
All possible marketing resources are connected to the cryptocurrency ICO project – media, social networks, forums, presentations, thematic resources. It is this stage that is decisive for the success of the project.
Stage 4: Sales.
From this point, the process of selling tokens begins. Usually, in the beginning the sale is carried out directly from the official website of the project, and then the tokens are displayed on cryptocurrency exchanges. The entry of new tokens on the exchange adds to the project’s credibility in the eyes of potential buyers, but there are many examples when such an exit accompanied even unsuccessful cryptocurrency ICO projects.
ICO cryptocurrencies – take part
These days, cryptocurrencies are most often associated with the record growth of their quotes in recent years – this explains their popularity among investors. The classic process of mining is no longer so cost-effective and it is cryptocurrency ICOs that are coming to the fore as the primary source of coins. So, how to take part in this process?
To do this, first of all, it is necessary to thoroughly study this area of investing – the history of ICO cryptocurrencies knows both dizzying successes and failures. That is why a potential investor needs to be fully immersed in the topic – specialized websites, news in the media, thematic forums and other resources dedicated to investing will give an opportunity to thoroughly study the topic and keep abreast of the latest market trends.
There are specialized resources on the Internet dedicated to the initial public offering of cryptocurrency. It is on them an investor can get detailed information about the planned ICO of cryptocurrencies. Among such resources, it is necessary to note the five most popular:
ICO cryptocurrencies – examples
The very first cryptocurrency ICO project on the market was Mastercroin. The project was launched in the summer of 2013. In fact, the project was a meta-protocol based on bitcoin. The authors of the project spent the received financing on improvement of bitcoin project’s architecture. As a result of the ICO, the Mastercoin project managed to attract more than five million dollars.
Such a successful example attracted the attention of market participants and the second cryptocurrency ICO in history ended up being the most successful in history. The project’s author announced the creation of a new platform based on the Proof of Stake protocol. It entered the market under the name NXT. One billion coins were issued as part of the project. As a result of the ICO, the authors were able to obtain funds on the market, the amount of which at the time of the project was only six dollars, and at the end of 2017, this amount was more than 70 million dollars.
The summer of 2016 was marked by the appearance of the first cryptocurrency ICO project, which managed to attract more than a hundred million dollars. It was The DAO project. The second factor that made this project so famous is the fact that about 30% of this amount was stolen due to a mistake inside the platform.
In 2017, cryptocurrency ICO projects totaling over four billion dollars were implemented in the market. However, this type of investment also has examples of failed projects. There are two types of such projects – failure due to the fact that the project was knowingly fraudulent, and failure due to internal mistakes of the project.
One of the most famous fraudulent projects was DeClouds – the scammers were able to publish the announcement of their project on the Bitcointalk forum (go online) on behalf of a forum user with a very high rating. It was this rating that prompted many investors to believe and invest their money in the shell. As a result, the scammers were able to collect and steal more than 296 bitcoins.
The most failing cryptocurrency ICO project due to internal errors is Memessenger – since the beginning of the ICO procedure, the value of coins has dropped a record 2,000 times! As a result, the third round of fundraising was able to raise just over $1,800.
Conclusion
Every investor needs to remember that making a profit as a result of a cryptocurrency ICO is possible, but you should not treat it as a frivolous business – you need to fully immerse yourself in the topic, know all the features and characteristics of the project. Only this approach will give you the necessary advantages in the market.
And it is important to remember that the most important indicator of the prospects of the project is the rate of the new coin on the exchange – it is the market assessment of the project is fundamental. Resources such as BITFLIP.CC, BINANCE.COM, EXMO.COM, YOBIT.NET and others are the most important providers of information about the project’s prospects.
Article provided by the Traders Club http://brokerman.ru/
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