ICO FOR BEGINNER
A Quick Overview
If you’ve yet to hear about digital currencies – or if you’re still confused about what cryptocurrency is – they’re a completely digital form of asset. Unlike the Euro, the Dollar, the Yen, or any other fiat currency tied to a national government, cryptocoins live exclusively electronically, transferred over the internet and stored digitally on hard drives.
Digital currencies are “printed” through a specialized process known as mining. Each cryptocurrency has its own decentralized database, usually called a blockchain or a ledger, that records all of that currency’s activity; users can “mine” the blockchain for new coins by devoting computing power to solving highly complex mathematical equations. The more time, energy, and computing power you mine, the more cryptocoin is produced.
Cryptocurrencies are becoming more integrated into society and everyday life. Their economic development brings them closer to more familiar traditional monetary systems. The ICO, crypto’s equivalent of the Initial Public Offering (IPO), is already functioning, but what is an ICO?
When a company goes public, and people believe in the idea of the company, it will generally grow quickly which means you stand to make a tidy profit.
The same principle applies to when a new coin or token is released on the blockchain.
These days, there are a lot of new coins coming out due to the nature of the blockchain as the applications require using a token.
Rather than sell shares in the company, coins are offered for sale to fund the company and investors jump on board.
If you’d like to participate in these Initial Coin Offerings (ICO), then there are some steps you need to take.
Register With an Exchange
If you don’t already have any cryptocurrency, then you’ll need to set yourself up with an account on an exchange.
This way, you can convert your fiat money into crypto, so you can then buy into the ICO. Usually, you will need either Bitcoin or Ether for this.
Make sure that you do this well ahead of the scheduled ICO since it may take a few days for the transaction to process.
Once you are accepted into the exchange and have an account with a digital wallet set up, then buying the cryptocurrency only takes a few minutes from when you buy to when you have access to it.
In some countries, these bitcoin exchanges are not allowed.
Though bitcoin may not be explicitly illegal, you have to be creative to open an account and transfer money.
If you live in a country where this is the case, or you don’t have a bank account, you can still get bitcoin to your wallet and participate in the ICO.
There are Peer to Peer platforms where you can send people cash in exchange for their Bitcoin, which is one way to avoid the ban.
Understand What You are Buying
Before any ICO, there is usually a white paper issued beforehand. This is similar to a prospectus when buying stocks.
It is a summary, but in great detail, about what the coin’s purpose is and the way it works.
This is essential to read ahead of time, so you know what the actual use of the coin will be.
This is usually what determines how well a coin will trade later as the ones that serve a specific purpose and are useful in solving a problem will generally do well value wise in the future.
Then, you should read the terms and conditions of the purchase agreement to make sure that you are going forward in the correct way.
This article has been contributed for information purposes only. The information provided herein is not and is not intended to be, investment, financial, or other advice.
Characteristic of crypto token:
- Static Supply and Static Price:
The company issuing the ICO for crypto offers a set amount of tokens at a fixed price. As such, the investors know the available number. They also know that the price will remain unchanged during the operation. Lastly, the company knows how much profit it will make.
- Static Supply Dynamic price:
This method supports companies with open funding goals or unpredictable projected costs. By releasing a set number of tokens, the sale’s performance and the projected expenses affect the ICO token price. Usually, if it performs well, the price will increase to secure the highest possible capital.
- Dynamic Supply and Static Price:
It functions much like the previous example. But instead of the supply affecting the price, the price affects the number of tokens that get released. If the initial token offering company is nearing its goal, it may lower the supply to keep the token price high and in demand.
- What are ICO Tokens:
ICO tokens are usually tokens built on another blockchain, such Ethereum’s. These are the tokens that are sold for Bitcoin, ethereum and fiat to fund new blockchain. The vast majority of ICOs issue tokens on other blockchains. While some ICOs build their own blockchain (referred as coins).