In the past, tech companies, virtual currencies as well as startups with viable ideas had only a few ways to raise funds: private equity, bank loans, venture capital or Kickstarter. Opportunities for investments were sadly limited to few investors and you must know the right people in order to have access to funds. But this is all in the past because the rise of cryptocurrencies and blockchain technology has brought a welcome change to how companies develop.
To raise enough funds for their projects, the tech startups now have blockchain to turn to. In preparation they gather teams of capable people from all over the globe, then sell themselves to the public through the aid of social media platforms. Investors like you and I from any location on the globe can then buy into the investment using cryptocurrency. The volume of investment is limitless, you can decide to do as little as $50 or as high as $100,000, it all depends on you. It is important to note that ICOs can be accessed by all, anybody can invest in an Initial Coin Offerings.
What are ICO Tokens?
In simple terms, Initial Coins Offerings (ICOs) is a crowdfunding mechanism favored by companies which trade in cryptocurrencies instead of fiat. It is comparable to Initial Public Offerings (IPOs) which dominates the mainstream investment world. Its function can be likened to a fundraiser campaign by companies (especially startups) which have the need to create a coin, an app as well as a digital service with connection to the blockchain. Once an ICO takes off, potential investors who have existing digital tokens like Bitcoin or Ether can buy into the Initial Coin Offering.
Even those who don’t already have an existing crypto wallet can go ahead and create one or purchase with fiat. In exchange, what the investors receive is a brand new crypto token specific to that particular ICO. In future, it is expected that the tokens will add more value giving the investors a good Return on Investment (IRO).
3 Benefits of Trading ICO’s
1. Democratization
ICOs makes it possible for projects to bypass the traditional process of applying for funds through the venture capitalists and mainstream financial institutions. These traditional routes consume a lot of time and resources. Anybody can invest in ICOs and reap the possibly massive returns.
2. Huge Profit Potential
The value of several virtual currencies has hit the roofs from cents to dollars within a short period of time. As a result, potential investors are very willing to make good investments in the next blooming ICO. Though some ICOs were lacking real technical potential, many investors, as well as spectators, still went ahead to bet on high returns which was responsible for the 2017 astronomical boost in price.
3. The Chance to Invest in a New or Emerging Technology
ICOs allow investors the opportunity to put their money into new and emerging technologies. Whichever way you look at it, each and every ICO is targeted to revolutionize an industry. A detailed analysis of Initial Coin Offerings can assist potential investors in getting on board with the right startup.
How to Trade ICO Tokens
1. Find an ICO that Catches Your Eye
This is the first step to take and you can monitor ongoing and upcoming ICOs through many sites. Once one is pinpointed, you need to perform certain checks:
- Check their website to follow up on the project by studying the white paper; know the people involved, their funding plans, their road map as well as other people’s opinion on the ICO.
- Go to Reddit ICO SubReddit or Bitcoin talk forum for information like ICO sale date and availability. Be ready with your funds since ICOs take just a short window to sell out once it opens.
2. Get a Crypto Wallet
The popular ones are Ether or Bitcoin, in the absence of one, you can sign up with Kraken or Coinbase and make funds transfer by linking your credit card or bank account to your Ether or Bitcoin account. Once funds are available in your crypto wallet, you are ready to take part in an ICO.
3. Get your ICO Checklist Ready
You need to undergo a familiarization process with the specifications of your selected ICO and when it is ready to go on the market, the people behind it will release a publication on how to participate which covers details like:
- Name of ICO
- The address
- The commencement date and time
- Starting block number
- Data field entry
- Gas Limit (recommended)
- My bid
- Guide on how to participate with crypto wallet
- Your wallet password, login details, and private key
- Gas Limit means the fees to send ETH for the Initial Coin Offering
- Your funds should be able to cover the fees as well as the investment proper.
4. Wait for the Countdown
The top resources to get info shortly before the ICO include:
- The ICO projects
- Blogs
- Telegrams
- Slack channels
5. When the ICO Starts
Send your investment fund to the ICO address published by the project. Also, set the right gas limit for your transaction to be consummated.
6. Claim your ICO Tokens
At the end of the ICO sales, you are now eligible to claim your tokens
- Some tokens become available immediately the ICO sale ends.
- Some might take a few days to get to the investor.
- Some tokens need to be redeemed manually.
Under normal circumstances, the tokens are made available between two weeks or a month but some take a longer time depending on the type of ICO.
7. Once your Tokens are Claimed
You can hold your tokens in your crypto wallet (Ethereum or Bitcoin). On the other hand, the start-up that is responsible for the ICO will have their own blockchain or wallet. Occasionally, ICOs go into partnership with wallet companies and exchanges in order to give support to their token. It is mportant to note that tokens are transferable from one secure wallet or exchange to another.
Congratulations! Your Initial Coin Offering investment is successful.
