This article will tell you about ICO Crowdfunding, who initiates these projects, how to participate in such a scheme and, most importantly, what benefits can be obtained as a result. We will also touch upon the history of this type of financial activity and the principle of its functioning. The reader will certainly be interested in learning about the most notable projects and the prospects of the subject.
Table of content:
- What is crowdfunding and when it was launched
- Cryptocurrency and new models of business
- ICO projects and their participants
- Future of Initial Coin Offering crowdfunding
- The most successful ideas went in life
The idea of crowdfunding
A person cannot be completely isolated from society. Family, work community, school class or student group, even an ordinary morning trip in the subway – no matter how hard you don’t want to see people, they are constantly in sight. Even the most convinced introverts need communication. There is no such person who, at least once in his or her life, did not need the help of friends or even ordinary passers-by when he got into a difficult situation.
You can get mutual benefit not only in real-life situations at home, at work, in school, but also in organizing your private business. If everyone makes their own contribution to the common cause, any idea can be realized, which eventually becomes profitable for all participants. Someone more, someone less, but the result is important. So the idea of crowdfunding appeared, when we understand the “crowd” as people, and “funding” as the financial or any other component of the common aim.
Nobody will say for sure when the first time people raised funds for the implementation of some general idea. Most likely, such projects have begun long before the computer technology was invented. Thus, the funds collection for Eiffel Tower building was arranged in the form of donations. Also for this purpose, lotteries and various entertainment events were held. The whole world managed to make a monument to Minin and Pozharsky in Russia in the 19th century, and the names of sponsors were widely announced.
Internet technology has allowed promoting the idea of crowdfunding to a new level. There were online sites to attract sponsors. By the way, the first one – and that is very symbolic - was founded at the turn of the millennium - in 2000. Its name is Artist Share. It still acts in support of talented artists and musicians. Popularization of cryptocurrency and blockchain technology led to the rapid ICO crowdfunding development. This system opens up fantastic opportunities for the participants.
How are crowdfunding and cryptocurrency related?
Cryptocurrency as independent, decentralized and inflation-protected electronic money opens great prospects for various kinds of investments, and ICO (Initial Coin Offering) is one of such directions. In contrast to the familiar IPO (Initial Public Offering) we are talking about the virtual economy.
Suppose you have a brilliant business idea. To implement it in the ICO format, you need to issue your own tokens - an internal crypto currency with a unique identifier that will gain value if your project succeeds and attracts as many sponsors as possible.
The meaning of ICO crowdfunding is that people who showed interest in your idea, for example, consider it promising, will buy with the existing cryptocurrency, bitcoin, ethereum, litecoin, etc. your tokens at the exchange rate with the expectation that in the long term they will receive profit on the stock exchanges due to their price growth.
Advantages for ICO Project Owners
Within the proposed format, you can implement any, even the most daring, idea. It can be linked with production, building, various service, show business, education, entertainment.
ICO projects can be implemented with low starting capital. You save much on legal process and cannot be afraid of restrictions on the part of government structures.
What benefit do investors get?
Acquired tokens can be used within the project, i.e. receive in exchange for coins directly a product or service on the most favorable terms.
As it has been already noted, investors will also earn if they sell tokens at a higher price. All this happens almost immediately after the fundraising is over.
Guarantees and safety
Do you trust your money to the first start upper just because you really liked the idea? No serious businessman will go on about his personal sympathy. The new trend attracts not only honest players, but also scammers. Moreover, there is no regulatory policy that would protect depositors. What’s the best in this situation?
Trust those teams that have already implemented successful projects, have a reliable reputation and feedback.
The company must have an official registration, documents, and clearly stated white paper published on the official website.
Own cryptocurrency emission and the conduct of the ICO should be justified, and all necessary agreements are provided on the website as well.
In business, including ICO, there is a reliable KYC (Know Your Customer) system provided. Your potential partners must be verified according to this standard.
Prospects for ICO crowdfunding
Due to cryptocurrency and the blockchain technology appearance business has risen to a new stage of evolution. Theoretically, you can release any token, which can easily become an independent and effective financial tool. In addition, the cost of ICO is an order of magnitude smaller than that of an IPO. For those who want to be involved in the innovation process, the following tips will come in handy.
Organize your presentation
As many as possible potential investors should learn about your project. Special web platforms are suitable for ICO accommodation. Provide the opportunity to communicate with people through social networks or within your own Internet resource. The main thing is to find out the level of interest and eliminate drawbacks in time.
Make an offer
Describe the content of your proposal and identify the funding amount. Clearly indicate the time when the company is to pay depositors their debts. According to a similar scheme, the system of paying dividends works.
Promote your idea
Competent and clear PR campaign, advertising videos, cooperation with popular sites and social networks will be useful. It is important that investors of different levels are attracted to the project, and this should be taken into account when choosing an advertising strategy.
Start selling tokens
After collecting the minimum amount, tokens are issued and distributed among ICO crowdfunding participants. In this case, for each investor there should be organized a personal office on the project site. The sale of tokens is also carried out on specialized exchanges.
TOP-5 successful crowdfunding campaigns
More and more ICOs are rising from scratch to meaningful results due to public funding. According to the information given in the Bitcoin Market Journal 2017 had been a lucky time for the following start ups:
- Mobile Go
- Basic Attention Token (BAT)
If you take as an example the first project, Mobile Go. It positions itself as an online store of mobile games that accepts the crypto currency. It held $ 53 million between April and May!
As you can see, ICO crowdfunding is a promising direction of business and investment. This scheme minimizes the number of intermediaries, makes the process of attracting capital transparent and honest. To gain a better understanding of the subject, we recommend visiting crowdfunding platforms where people who are interested in financing their own ideas or willing to invest in other people's projects gather.