Understand ICO projects
If you have little or no knowledge about the ICO, below you will find the basic information to familiarize with the concept of ICO and you will understand the benefits.
ICO simply means Initial Coin Offering. It is a fundraiser for a cryptocurrency project, business or venture.
Basically, it consists of an unregulated means of crowdfunding through the use of a cryptocurrency.
During the implementation of an ICO, a company or a new company can easily raise funds for the continuation of a project or the launch of a new one by selling certain tokens of a cryptocurrency.
During an ICO, a small percentage of a newly issued cryptocurrency will be sold to potential cryptocurrency investors in exchange for money or any other legal tender.
ICOs provide easier fundraising than traditional loans and are unregulated.
Another important feature of ICOs is their time limit. They are designed to last from a few days to a few weeks. Companies rarely drag their ICO for longer than a month.
ICOs are therefore designed to raise funds for a specific project or purpose and have a deadline.
The proposing company can decide to carry out the fundraising in several phases, with each phase having a well-defined objective and which must be strictly respected.
Since the ICOs are not regulated by a superordinate body, any funds lost during an ICO will be without any possibility of recovery.
It is therefore necessary to stay away from scams and to choose wisely the projects on which to invest your money.
Here are some tips that can help you understand if there is a legitimate company behind an ICO:
Such a company will create a website where its white paper is made available to the public and, in particular, to potential investors.
The white paper will contain valuable information that will make the ICO credible and legitimate. This includes:
the purpose of the project
the duration of the fundraising
the amount to be collected and the number of tokens to be sold
the team behind the planned project.
Other information includes the cost of the tokens, which may vary temporally, and what is required in exchange for the token: one or more cryptocurrencies or fiat money.
During the ICO campaign, both supporters of the initiative and enthusiasts will purchase some of the digital coins available in virtual currency or fiat. These currencies are known as tokens. They are similar to a company’s shares sold in an initial public offering transaction to available investors.
During the campaign, the ability of the ICO to raise or not fund the expected funds determines the success of the ICO campaign.
If the expected funds are raised within the allotted time, the campaign is considered a winner and the money generated will be used to finance the project that made the fundraising necessary.
If the ICO is considered a bankruptcy and it is not a scam, the lenders are reimbursed.
If you take some time to examine this aspect critically, you will see some signs that will indicate whether you need to proceed with your investment or avoid this project.