ICO: What You Need To Know..

This site is geared towards both regular stock investing and cryptocurrency investing like bitcoin and others. There is one acronym that has come to light since the creation of cryptocurrencies and that is ICO(Initial Coin Offering).

Let me start by explaining what an IPO(Initial Public Offering) is for anyone who hasn’t heard of it. Once you understand what an IPO is it will make understanding what an ICO is easier. Privately owned companies who want to offer shares publicly releases common stock, or a percentage of the company to the public. The main reason a company goes public is to raise money for growth or paying off debt. IPO options raise the largest sum of money for a company and its early investors.

Like an IPO for a publicly traded company, a cryptocurreny startup releases coins to the public before trading on an exchange to grow capital. Lets take Ethereum which was announced in 2014 offered an ICO that raised 18 million dollars worth of Bitcoin. At the time of the ICO Ether coin were $0.40 each(I wish I got on that) now they are $280 each.

Here are the catches! The stock market is regulated by the SEC(Securities and Exchange Commission) which enforces federal laws where ICO are unregulated. The Economist explained this part pretty well

ICO “coins” are essentially digital coupons, tokens issued on an indelible distributed ledger, or blockchain, of the kind that underpins bitcoin, a crypto-currency. That means they can easily be traded, although unlike shares they do not confer ownership rights. […] Investors hope that successful projects will cause tokens’ value to rise.

Unlike an IPO where you are given a share of a company that is available to trade on the stock market at a monetary value based on companies performance; An ICO are investments into a company or idea without a physical product, in this case a coin, in hopes that the coin comes to become reality and is traded at a higher value then you purchased them for. It is a high risk but can be a high reward if the coin does pay off like Ethereum. This is also a chance to bring in new coins by backing the people who create them. We have seen some amazing changes in the cryptocurreny world since Bitcoin has been around. SHA-256 started it all but now look at all the different algorithms of the new coins that have come out. Also, look at the technology where blockchain is being implemented in which is another article in its own.

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