ICO or Initial Coin Offering has come under everyone’s radar in the recent times. As of 2016, cryptocurrency startups raised more than $200 million in ICO. These numbers may not seem much compared to its counterpart traditional stock exchange IPO, but it has some underlying value that seems to attract investors. In the previous blog post, we have discussed the development of cryptocurrency in the step-by-step process. This blog post will cover the ground on how ICOs helps projects through crowdfunding process.What is Crowdfunding?
Crowdfunding is a method for companies to finance their projects from the public or community. It is a way for startups to raise the needed money without any involvement from banks. Crowdfunding originally came into existence with GoFundme, Kick Starter, and many others being the initial angel investors for startups, but with the entry of ICO the whole game of crowdfunding seems to have changed.
Since 2016, ICO has gripped the spotlight as it has gathered the reputation as one of the most comfortable and most efficient methods of raising funds for any startup without any regulation over the accumulated fund.Impact of ICO in Crowdfunding
People can participate in ICO crowdfunding campaign which is also known as Token Sale, where the concerning project launch an ICO by issuing their affiliated tokens to the people. The potential investors usually buy these token through cryptocurrency like Bitcoin and other cryptocurrencies and acquire the tokens in nascent stages of the token sale.
The purchase of tokens is usually limited by the time limit or the cap on the amount of funds raised. Tokens have become promising crowdfunding option as it yields the potential to reach the masses in a limited period of time.
A few types of initial coin offering is defined below so that the company can find the difference best suited for their project.The company should define the actual funding am...