How Does An ICO Work?

In the modern digital era, companies are finding new ways through which they can fund projects. An initial coin offering (ICO) is one of the most successful ways through startups are able to raise funds, fast and easy by selling tokens to their projects. It is an all-digital process which allows investors, or individuals or institutions, interested in your project, to buy into that project through the tokens.

What Is ICO

An ICO is similar to an initial public offering (IPO), where companies raise funds by issuing shares to investors. For the ICO, it includes the sale of tokens which are created by the startup launching the ICO. It is thus a crowdsale that invites crypto investors to buy tokens created for the project in the hopes that it will increase in value.

How it works

Tokens have to be created by the startup, which will be sold to the interested crypto investors. Before the launch of an ICO, there are many details that have to be laid out to make it a success. First, there has to be a whitepaper, which outlines the details of the project. The white paper includes the project purpose, the problems it solves, the money needed to fund the project, the number of tokens to be issued, and the currency to be used.

ICOs have to be transparent, which means that every detail of the campaign has to be made available to make it a success. If the ICO fails to meet the minimum threshold in terms of the money needed to fund the project, then refunds are made and the ICO is deemed unsuccessful.

This can be attributed to the inadequate transparency of the ICO and poor marketing of the same. With proper ICO marketing, you will be able to attain your ICO objective in creating enough awareness and enticing investors to participate in the token sale.

However, if the ICO is able to meet the target, it proceeds to invest in the intended project and investors hope the value of the token will increase. Once the project kicks off, the token starts trading in a crypto exchange. The value of the coin will depend on the success of the project being funded by the token sale.

ICO marketing

ICO marketing is an important part when it comes to launching an ICO. Way before you launch an ICO, you will need to launch a marketing campaign to help create awareness for the interested crypto investors who watch out for the list of upcoming ICOs on a regular basis. The whitepaper is the most vital document that can paint a clear picture of what your ICO is all about. You should reveal the name and details of your team and how well they are equipped with the various parts of the project investors want to buy into. Start marketing on social media sites and reputable crypto and blockchain forms such as Reddit and bitcoin talk.

Crypto investors can find lists of the upcoming ICOs in top crypto sites and forums, where they can read the white paper and invest in the crowdsale. With the many ICO scams launching on a daily basis, there are regulations set for ICOs and crypto exchanges in an attempt to weed out those scams.