WHAT IS AN ICO
With the recent crypto-currency boom that the global market has witnessed, a large number of incipient companies have been making their way towards the integration of the blockchain technology.
Now we have already witnessed the proficiencies of cryptocurrencies like Bitcoin and Ether which have been ruling the crypto-market for the past few years. Now this is definitely the ideal situation to make use of the prospects and these companies embark on such a journey for the aforementioned reason itself.
Incipient companies and funding their ventures
An ICO refers to Initial Coin Offering. This is basically offering of the digital currency to gain monetary benefits. The incipient companies or stat-ups require funds to engage in their business activities. They also require investors and users that would formulate their user base. The ICO can thus be basically envisioned as a fundraising programme which helps these companies gain the requisite capital through crowd participation.
The ICO is pretty different from any crowd-funding programme. But at the same time it holds quite a lot of similarity to that of IPOs. In case of an ICO the user generally buys the tokens which are forwarded by the company for the sale. These tokens are generally bought in exchange for cryptocurrencies like Ether and Bitcoin. The bitcoin and ether are later used by the company for development purposes.
The tokens generated by the company can be used for a number of activities. Generally every participating ICO company have their very own selling point. The ICO venture generally aims towards ensuring that the user base can benefit from the company tokens. For instance in case of a recording company venturing into an ICO, the tokens can be used for making the use of their recording services. For other companies like transport and accommodation, the tokens can be used across transport chains and hotel services to avail the benefits. In exchange the companies are paid in bitcoins and ether for the tokens which they use to enhance their business model and make it global. It is predominantly a symbiotic relationship which benefits both ends.
Funding for start-ups
Over the years, ICOs have emerged as a funding source for start-ups. It has been among the primary way in which businesses have integrated the blockchain technology into their architecture and gained the requisite capital for business development.
The ICO is transparent and provides the users with a consolidated marker to avail the services. It essentially brings forth the proposition of an open source market where the users can avail all of the benefits at one go. .
HOW DO INITIAL COIN OFFERINGS WORK
With the inception of the ICO blockchain technology, transactions in the modern age have become scalable, secure, transparent and extremely reliable. The blockchain technology in collaboration with the start-up industry has emerged as a gateway for secure investments and talent acquisition in the technical domain.
The conventional systems which can also be referred to as the “monolithic systems” have been seemingly replaced with a much more integrated approach which renders aspects like transparency and interoperability within the hierarchy of the distributed ledgers and the existing transactional revenue system.
The ICO token roadmap helps to devise the ideal time for making the ICO moves. It helps in understanding the timeframe from when the tokens would be available for public use. Generally the companies associated with the generation of the token will have associations with a number of service providers active on their niche. For instance travel companies engaged in an ICO will have associations with ticket booking portals, hotel chains and travel related enterprises that are willing to offer their services. The customers can now avail these offers and services forwarded by the partnering companies in exchange for these tokens. It is a very simplified approach which makes the entire process simple and less complicated. It also eliminates the propaganda of a middleman and brings forth the service on to a transparent and unified platform.
It would thus be ideal to ascend the fact that the blockchain technology, cryptocurrency and the ICO ventures have emerged as integral components governing the financial structure of a company from the start. It is definitively one of the brightest prospects for both the users, investors and the companies to make a decent mark in the present market.
Despite the fact that the blockchain technology and the cryptocurrency arcadia tend to be decentralized, it would wrong to state them unregulated. With growing instances of fraudulency in the global market, various global regulations have been imposed on the emerging ICOs.
It is important to abide by these regulations whereby the tokens are classified into their respective typology. There have been a large number of emerging regulatory bodies all over the world. The US SEC and the FCA (Financial Conduct Authority) are the leading regulatory bodies for US and UK respectively.
Seeing the global advancements, the EU and Australian Union have also imposed a set of regulations which essentially governs the emerging ICOs. These regulatory bodies not only regulate emerging ICOs but also closely monitor the various exchanges that are active in their respective arcade. The close monitoring and analysis of the ICO and cryptocurrency venture might seem extravagant, but experts tend to debate on the efficiency of such regulatory norms. However given the present scenario where these regulations seem to be governing the emerging ICOs, it is impeccable that we abide by the regulations, especially for the start-up companies engaging on an ICO.