How Does an ICO Work?
The Initial Coin Offering (ICO) is the cryptocurrency industry's equivalent to an Initial Public Offering (IPO). ICOs function as a fundraising method initiated by a company that wants to raise money to create a new token, app, or service. Interested investors can buy the offer and receive a new cryptocurrency token issued by the company. This token may have some utility for using the product or service the company offers, or simply represent a stake in a company-related project. ICOs are easy to configure due to technologies. Most ICOs work by having investors send money (usually Bitcoin or Ethereum) to a smart contract that stores the funds and distributes an equivalent value in the new token at a later time. The tokens collected in ICOs can be astronomical, as you receive money from a global pool of investors.
The ICO really caught the attention of users in July 2014. During this period, Ethereum rose to $18.4 million and a new era of ICOs was entered.
With the success of Ethereum, ICOs have become the de facto method to finance the development of the crypto project as a token that is somehow integrated into the project.< /p>
Since 2013, the ICO is often used to fund the development of new cryptocurrencies. The pre-generated token can be easily sold and traded on all cryptocurrency exchanges if there is demand.
How Does the ICO Work?
When a cryptocurrency entrepreneur wants to raise money through an ICO, they usually know what the project is all about. , should calculate how much money will be needed after the completion of the project, how many virtual tokens the founders will hold, what kind of money will be accepted, and how long the ICO campaign will take. purchased by unit. These coins are called tokens and are similar to shares of a company that are sold to investors. If the money raised does not meet the minimum funds requested by the firm, the money can be returned to the backers and the ICO will be deemed a failure. If funding requirements are met within the specified time frame, the money raised will be used to achieve the objectives of the project.
What are the Differences Between ICO and IEO?
- The IEO acts as the website of the token issuers, while the IEO is a exchange platform.
- ICO may vary between different projects. IEO guides the exchange users according to AML (Risk Management) and KYC (customer Recognition).
- While personal selling is provided by the developers in the project in ICO, in IEO these transactions can only be provided through cryptocurrency exchanges.
- ICO has to raise money for companies by attracting the attention of users through high projects to meet the market need. IEO, on the other hand, can only earn directly through stock exchange sites.
- For my personal after-sale token listing, the ICO must reach the exchange itself; IEO can be accessed from any exchange site where it is listed.