Cryptocurrency has brought a revolution in the global financial system. Traditional investors are also putting their money in virtual currencies. In the crypto world, Initial Coin Offerings (ICOs) is a popular term that involves some similar activities of an IPO in a stock exchange. It allows individuals or companies to offer their own crypto tokens in exchange for popular crypto coins or fiat money.
However, many business owners ask whether it is a viable option? If you are one of them, you should understand how it works and its potential benefits. There are other options, such as taking loans from banks or finance companies. But ICO is an excellent way to raise capital without staking your company shares. So, let’s start with the basics of ICO and how it works?
Crypto Initial Coin Offerings (ICOs)
You can easily understand an ICO with a simple example. Let’s say you have your startup and need money for running your business. You can take a loan from banks or make a contract with the Ventrue Capitalists or investors.
However, you can create your own digital currency and launch an ICO to attract investors. They will purchase your crypto tokens in exchange for popular crypto coins like Bitcoin, Ethereum, or fiat money. The problem is, why should an investor invest in a valueless digital coin? If you can provide a real-world solution, investors may think that the future value of the coins may rise and invest in it. If you want to launch an ICO to raise funds, here is how you can start.
- First of all, you need to create a White Paper, a document that includes your idea and purpose in detail. Also, it explains the proof of work and all the essential details about a cryptocurrency.
- You need to build a professional website that contains your White Paper, company details, and other information.
- Social presence and marketing your website is a vital part of an ICO process.
- You should mention the payment process and the currencies you accept.
- Develop a digital infrastructure to issue your digital coins in return for the funding.
The investors will not get any share of your company; they will invest only with the hope of rising in the future value of your digital tokens. So, there is a risk involved for the investors if your company makes a loss or the value of your digital tokens won’t increase.
Benefits of ICOs for Business Owners
If you want to raise capital by offering a digital token, here are the potential benefits:
- Global Access: Investors across the world can invest in your digital tokens. One of the best things about cryptocurrencies, people from any part of the world can access the network. The transactions are faster, and it does not require any intermediary for cross-border transactions.
- Decentralization: Although you can digitally invest in IPOs, many complicated processes are there due to the involvement of banks and the government. As digital currencies operate through a decentralization network called blockchain technology, it’s simple and efficient.
- Faster Processing and Anonymity: The processing of all the activities in ICOs is faster, and investors can invest without revealing their identity. It allows an excellent opportunity for people who want to invest but don’t want to reveal their identity.
These are some potential benefits of ICOs for business owners. But if you are an investor and thinking of investing in ICOs, here are a few things that you need to consider. Many successful crypto investors use the epochtimes.de to figure out investment opportunities in the crypto space.
- Review the White Paper carefully and analyze the applications.
- Check for legitimacy: company website, team members, social media profiles, etc.
- Check for the Minimum Value Product readiness.
- Compare with its competitors.
- Analyze their plan and fund utilization.
The Bottom Line
Cryptocurrency is the future of the financial system. However, you need to be careful while investing in cryptocurrencies or ICOs. As it’s relatively a new way of investment, many fraudsters and cybercriminals want to deceive people. So, you should check everything in detail before making any investment. Lastly, please share your queries and opinions in the comments section.