ICO is short for Initial Coin Offering. While launching a new crypto-token or cryptocurrency, the ICO developers offer investors a small number of units in return for various other major crypto coins, for example, Ethereum or Bitcoin.
ICOs are great tools for rapidly raining development funds to back up new cryptocurrencies. The particular tokens available for an ICO can easily be traded and sold on cryptocurrency exchanges, supposing there’s enough demand for them.
The Ethereum ICO has become the most significant achievements, and the rise in popularity of Initial Coin Offerings is growing these days. Arthur Hayes, BitMEX CEO, recently affirmed that Ethereum will rally to at least $200.
Ethereum’s ICO, a formula of success
Ethereum’s prudent agreements system has integrated the ERC20 protocol standard that establishes the main regulations for creating various other agreeable tokens which can easily be transacted on Ethereum’s blockchain. This facility made it possible for others to develop their own tokens, agreeable ERC20 standard that can easily be bought and sold for ETH on Ethereum’s network.
The DAO is actually a noteworthy example of efficiently using Ethereum’s smart contracts. The particular investment firm increased $100 million worth of ETH, and the traders received in return DAO tokens making it possible for them to take part in the governance of the platform. Unfortunately, the DAO hit a brick wall right after it was compromised.
Ethereum’s ICO, as well as their ERC20 standard protocol, have improved the latest technology of crowdfunding blockchain-based plans via Initial Coin Offerings.
Additionally, it managed to make it super easy to make investments in various other ERC20 tokens. You only need to transfer ETH, insert the contract in the wallet and the new tokens show up in the account so that you can use them easily.
Needless to say, you cannot assume all cryptocurrencies currently have ERC20 tokens existing on Ethereum ‘s network but more or less any brand new blockchain-based project can kick off an Initial Coin Offering.
The legitimate status of ICOs
In the case of the legitimacy of ICOs, it is a bit of a new world out there. The theory is that tokens are usually sold as digital items, not financial property.
Having said that, some states are becoming cognizant of ICOs, and they are already focusing on unsafe effects of them in an equivalent way to sales of securities and shares.
Back in November 2018, the US Securities and Exchange Commission (SEC) categorized ICO tokens as securities. To put it differently, the Securities and exchange commission was getting ready to cease ICOs they think are misleading traders.
There are a few cases wherein the token is nothing but a utility token. What this means is the owner can easily use it to gain access to a certain protocol or network in which they are certainly not considered as financial security. On the other hand, equity tokens whose purpose is to worth in value are fairly close to the idea of security. Honestly, the majority of token acquisitions are made, especially for investment purposes.
You should keep this in mind that everyone is launching ICOs these days, and all these projects are hoaxes or do not have the firm foundation they require to flourish and make it worth the money. That is why make sure that you do a thorough study and look into the team and history of whatever crypto venture you might like to make investments in. You can find multiple sites out there that have ICO lists; I highly recommend checking this ICO list if you are interested in making investments in any crypto project.