What is ICO? How does it work?

by Charvie Malhotra Marketing Manager

In past few years the digital world has seen many extensive changes that have completely turned the business scene upside down. With blockchain working as a digital financial forum and cryptocurrency altering the way we look at money, wider opportunities of business and profit making have spread out. Such a thing has happened with the way we traditionally used to look at collecting funds for a new project or idea - as it has been transformed by the advent of Initial Coin Offering (ICO). It is an originative decentralized process of exchanging tokens for funds in form of cryptocurrency or fiat to support a new business idea that the investors entrust, and that has a potential to gain possibly humongous profits.

In simpler words, certain companies (generally startups) that have limited resources to work upon a ground-breaking idea or project use blockchain technology to collect funds from interested investors without having to involve any third parties. Basically, it is relatively different from Initial Public Offering (IPO), as they are not required to give a share of their equity in return of funds. Does that mean anyone can launch an ICO? Yes it does!

How does ICO work?

First of all, anyone can launch an ICO regardless of the fact whether they are involved in blockchain affairs, or they are an established company or a startup. The main requirement here is that you must have a good knowledge about the blockchain market and dealing in cryptocurrency.

It starts with an idea for a project that you want to work upon. Always begin with mapping out all the details of every nook and corner of that project so that no blank spaces are left out. Once all is compassed, be sure to start creating a hype about it in your community. If you are not part of a community, then begin there! Reason being, if you have no identification or contacts in a community, barely will anyone trust you enough to invest in your ICO. Many startups take the help of communities on Reddit and several social media.

As the publicity is continuing, it is mandatory to create a whitepaper. It is a document that contains every single detail about the project including ideation, aims, future expectations and technical information. A whitepaper plays a significant part in this whole operation since it poses as the face of the project. Any investor will make their decision based upon how convincing and authentic this document is.

Then you get the tokens ready, which basically are your own cryptocurrency that presently has no value. After releasing the whitepaper officially you will collect funds in exchange of these tokens. Decide carefully on the amount of tokens because you are required to create a demand for them in the market. The whitepaper should clearly state what role do tokens play in this exchange as they should be of some value in upcoming future. They can either be used in the services you provide or will give some sort of financial return to the investor.

It is based upon a trust that the value of tokens will shoot up in future so that everyone involved can avail profits from it.

ICO is a gamble and there is no surety whether it will achieve profits or losses for you. Yet this is a window of opportunity for the ambitious startups to produce an innovative project and preferably make it a success. If you are one of those ambitious folks, contact Webcom System for ICO Development Solutions.