Is An Ico Initial Coin Offering The Right Move For Your Startup?

Eastman Kodak, the photography company, announced at the CES 2018 that it will be launching an ICO and get into bitcoin mining this year. This is on the heels of another announcement by Telegram, the messaging startup that released plans to launch a multi-billion dollar ICO within the year. ICO stands for Initial Coin Offering, Which is an important concept for any Bitcoin futures traders. Much like an IPO , this is an opportunity to invest in a new company in the hopes of generating some future profit. However, unlike an IPO, you are not actually receiving any shares of a company when you participate in an ICO. A chilling effect on the creation of new ICOs in the U.S., putting a number of planned offerings on hold.

What is ICO

Telegram – The fastest-growing social media platform and an outlet that must be marketed to, Telegram was very lovingly embraced by the crypto community from its inception, and the popularity keeps on growing. STOs are compliant with government regulations and are usually only offered to accredited investors. ICOs, on the other hand, sell cryptographic coins, also known as tokens, as a way to fund a specific project.

Products Can Be Sold And Traded Internationally

Also in 2018, the company behind the EOS platform shattered Dragon Coin’s record by raising a whopping $4 billion during a yearlong ICO. The Chinese government in 2021 went on to ban cryptocurrency mining and declared all cryptocurrency transactions illegal. Make sure that project developers can clearly define what their goals are. Successful ICOs typically have straightforward, understandable white papers with clear, concise goals.

It recently boomed in popularity to becoming a major source of capital for start-ups. Once you’re ready to invest, you’ll likely need a popular asset like Bitcoin or Ethereum to exchange for the ICO token as well as a crypto wallet where you can receive your tokens. In fact, in the example of Tron above, TRX originally started out as an ERC20 token before migrating to its own native Tron blockchain. Many projects will start as an ERC20 or other non-native blockchain token before moving to their own blockchain. This is because an ERC20 token takes less time and money to create and allows teams to test their ideas in the market before committing more resources toward developing their own blockchain. The same way stock investors hope that the value of their stocks goes up and/or that they receive income from their stocks, ICO investors hope that the value of their tokens goes up.

If you’re new to ICOs and cryptocurrencies, start small and avoid investing more than you can afford to lose. Eric Rosenberg is a financial writer with more than a decade of experience working in banking and corporate accounting. He specializes in writing about cryptocurrencies, investing and banking among other personal finance topics. Facebook groups – There’s no ICO advertising allowed on Facebook, but there are plenty of popular groups with an interest in all things ICO, cryptocurrencies, and blockchain.

What is ICO

With ICO under constant scrutiny from the Blockchain world especially from the investors’ side of the stakeholders, IEO has already established itself as ICO 2.0. One that is already on the verge of sweeping the ICO users from under its feet. Once the IEO project is approved, it takes very less time to get them listed on the Exchange. The time and probability, which in case of ICOs are fairly slim – at least in comparison to IEOs.

An opportunity to obtain new cryptocurrency for a low cost in hopes to get good returns on their investment . Understand the opportunity that is being presented, and do your homework on the individual who is doing the presenting. Is the offering legal and is the person offering this product licensed to do so? Make sure you visit for more resources before you invest. While some ICOs may be attempts at honest investment opportunities, many may be frauds, separating you from your hard-earned money with promises of guaranteed returns and future fortunes.

Create a white paper or other document outlining the system, make a website or app describing how it works, and seek funding. Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate. Crypto tokens are a representation of a particular asset or a utility on a blockchain.

Investors now expect more, such as a minimum viable product, before investing their hard-earned money. In layman’s terms, a cryptocurrency exchange is a place where you meet and exchange cryptocurrencies with another person. The exchange platform (i.e. Binance) acts as a middleman – it connects you with that other person .

Investor Gov

The most important thing you want to do is make sure that either you or someone involved have worked in and understand cryptocurrency and blockchain. Even if anyone can make an ICO, it doesn’t mean that everyone should. You need to be able to answer questions on the spot about every little detail pertaining to your ICO.

Once you are sure that an ICO is legitimate, register for it to be a part of the coin launch. This technique also has a thorough vetting procedure to verify the legitimacy of the fundraiser. The CEX platform also takes charge of promoting and marketing the IEO.

The purpose of an IPO is to sell stocks of the company in order to raise capital from the public. On the one hand, ICO campaigns can provide the boost needed to get an idea off the ground, with a lower barrier to entry than traditional fundraising methods. On the other hand, because ICOs are relatively easy to launch and often don’t follow regulations, they could be fraudulent and leave investors at risk of being scammed. ICO history began in 2013 when the first one was held by Mastercoin, a digital currency and communications protocol.

Cons Of Ico

United States Securities and Exchanges Commission treats ICO’s differently. If the token being sold is merely a utility token, it does not classify as financial security. However, if the token has qualities of an equity coin with a sole purpose to appreciate in value and benefit its investors, then it can be treated as security and must comply with the legal processes. The rise of cryptocurrencies and blockchain technology is helping boost the popularity of ICOs. The largest ICO to date was executed by Telegram, an instant messaging services provider.

It is named after Satoshi Nakamoto, the creator of the protocol used in blockchains and the bitcoin cryptocurrency. Like any business, you need to hook your buyer by the end of the first page. Ethereum’s white paper takes the time to explain what blockchain is, and then goes on to detail how they intend to build on the progress that Satoshi Nakamoto made and create something exciting.

“Explaining the new cryptocurrency bubble—and why it might not be all bad Investors are pouring tens of millions of dollars into new cryptocurrencies”. Countries have different approaches to how they regulate cryptocurrencies. Cryptocurrencies can be transferred easily across national and jurisdictional boundaries. This makes it difficult for central authorities to control and monitor the ownership and movement of holdings of cryptocurrencies. A 2017 Wired article predicted in 2017 that the bubble was about to burst.

Why Icos?

Businesses can issue their digital coins or tokens and sell them to people looking to invest in a particular company or into an up-and-coming cryptocurrency. In many ways, an ICO is the cryptocurrency version of an initial public offering in the stock market. While it’s possible to make sizable profits through ICOs, a lack of regulation makes them extremely risky. In this guide, you’ll learn all about ICOs, including how they work and some notable examples. On the contrary, as stated in recent US regulatory action, ICOs only have regulation requirements if they are issued as security tokens rather than utility tokens, which are described in more detail below.

Before making financial investment decisions, do consult your financial advisor. Once you learn what is an ICO, you might then want to find the best ICO to invest. If you’d like to invest in cryptocurrencies without the ‘ICO’ part, then you should look into exchanges – Coinbase and Binance would be two great ones to start off with. If you want to start your own cryptocurrency or dApp, you will need a lot of money. If people are interested in your ICO and think the project is good, they can buy your token for a certain price. ICOs were revolutionary because they enabled anyone to raise funds in a matter of moments for any sort of project as long as it was blockchain-based.

Ethereum and NEO are just some of the big names that successfully managed to raise capital through an initial coin offering. Now, ETH is the world’s second-largest cryptocurrency by market cap. An initial coin offering is the launch best sto of a new coin, a type of digital asset. While ICOs may launch new cryptocurrencies, those are often created through a different process called mining. An ICO refers to companies raising funds by issuing a new cryptocurrency.

  • “If you have an ICO or a stock, and you want to sell it in a private placement, follow the private placement rules.”
  • Investors are drawn to ICOs for the dream of buying in early to a successful cryptocurrency.
  • Blockchain has been reshaping money as we know it in the last decade, and current blockchain statistics prove that it is well on its way to reshaping other aspects of our lives as well.
  • Instead, existing blockchain platforms that run existing cryptocurrencies such as Ethereum allow the creation of the tokens with minor modifications of the code.
  • There are some free sites, but they simply don’t offer the reach or exposure the premium sites do.
  • Creating your own digital currency and initiating an ICO is not as complicated as it seems.
  • According to the official ICO definition, ICO stands for an initial coin offering.

Although the SEC actively enforces securities laws, risks can be amplified, including the risk that market regulators may not be able to effectively pursue bad actors or recover funds. While it used to be predominantly a method for blockchain startups to raise funds, it’s now becoming increasingly popular with large companies as well. For example, Kodak launched their own token named KODAKCoin back in 2018, and it saw some success but ultimately got shut down.

By listing IEOs, the exchange gets to become the center of many social mentions that link back to their platform. This, in return, help them get attention from the market, which in return contributes to their growth to a great extent. IEO eliminates this discrimination by making it possible for all class of investors to enter at all the different investment stages.

Are Icos Legal?

In fact, over 90% of ICO projects ended in a loss to initial investors. The worst example of a disastrous ICO is The DAO. The DAO, or decentralized autonomous organization, project managed to raise $150 million worth of Ethereum. However, shortly after the ICO ended, a hacker managed to drain a third of the amount raised due to a bug in the smart contract’s code. This is what the team is actually aiming for, and it will not accept any more funds once the hard cap is met. A legit way to launch an ICO is by announcing it on It is the largest forum for Bitcoin and cryptocurrencies, and legitimate projects will gladly participate in the discussions and answer all the questions.

If You Responded To An Investment Offer Like This, You Could Have Been Scammed

The first instance of the SEC cracking down on an ICO occurred on Dec. 11, 2017, when the agency halted an ICO by Munchee, a California company with a food review app. The SEC issued a cease-and-desist letter, treating the ICO as an offering of unregistered securities. Though IPOs are funded by generally more conservative investors anticipating a financial return, ICOs may receive funding from risk-tolerant supporters who are keen to invest in a new, exciting project.

Ico Updates

But because ICOs are not regulated by financial authorities like the SEC, funds that are lost due to fraud or incompetence may never be recovered. Celebrities, from movie stars to professional athletes, can be found on TV, radio, and social media endorsing a wide variety of products and services – sometimes including crypto-currencies and coin offerings. A celebrity endorsement does not mean that an investment is legitimate or that it is appropriate for all investors. It is never a good idea to make an investment decision just because someone famous says a product or service is a good investment.

Instead, Sproule sent over $5.8 million of the ICO’s proceeds to South African gold mining entities—a use that was never disclosed to investors. The SEC ordered him to pay $195,047 in civil penalties and restricted him from holding a position as an officer or director of a company. SEC Chairman Gary Gensler has remarked that many unregistered securities exist in the crypto industry.


Identify usability issues, discuss UX improvements, and radically improve your digital product with our UX review sessions. It’s therefore wise, as usual, to never commit more money than you can afford to lose. As laws struggle to keep pace with advances in technology, regulatory gaps are inevitable.

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