Does everyone fully understand ICO term? Let’s check some important points in this question!

For traditional companies, there are a few ways of going about raising funds necessary for development and expansion. A company can start small and grow as its profits allow, remaining beholden only to company owners but having to wait for funds to build up. Alternately, companies can look to outside investors for early support, providing them a quick influx of cash but typically coming with the trade-off of giving away a portion of ownership stake. Another method sees companies go public, earning funds from individual investors by selling shares through an Initial Public Offering (IPO).

An ICO is somewhat similar to an Initial Public Offering (IPO) in which investors purchase shares of a company.

An ICO (Initial Coin Offering) is a fundraising mechanism in which new projects sell their basic crypto tokens in exchange for some cryptocurrency.

The public could be interested in the tokens on offer for the following reasons:

🔹 The token has an inherent benefit.

It grants the holder access to a service, a say in an outcome or a share in the project’s earnings.

🔹 The benefit will be in increasing demand (which will push up the market price of the token).

There are few, if they exist, restrictions on who can participate in an ICO. And since you’re taking money from a global pool of investors, the sums raised in ICOs can be astronomical. A fundamental issue with ICOs is the fact that most of them raise money pre-product. This makes the investment risky in some ways.

The first token sales appeared in 2014, when seven projects raised a total of $30 million. The largest that year was ethereum — over 50 million ethers were created and sold to the public, raising over $18 million.

Activity started to pick up in 2016, when 43 sales raised $256 million.

Included in that total is the infamous sale of tokens in The DAO, an autonomous investment fund that aimed to encourage ethereum ecosystem development by allowing investors to vote on which projects to fund. Not long after the sale raised over $150 million, a hacker siphoned off approximately $60 million worth of ether, leading to the project’s collapse (and a hard fork of the ethereum protocol).

Investors in an ICO operation are usually motivated to buy cryptocoins in the hope that the plan becomes successful after it launches. If this comes to pass, the value of the tokens they purchased during the ICO will climb above the price set during the ICO itself, and they will achieve overall gains. This is the primary benefit of an ICO: the potential for amazing returns.

Keep paying attention on AIDUS Project!