An initial coin offering (ICO) or initial currency offering is a type of funding using cryptocurrencies. In an ICO, a quantity of cryptocurrency is sold in the form of tokens or coins to investors, in exchange for legal tender, or other cryptocurrencies such as bitcoin. The tokens are sold when the ICO’s funding goal is met and the project launches.
An ICO can be a source of capital for startup companies. ICO’s are sometimes called “token sales”. Initial Coin Offering is where a company goes from private to public status by selling shares for equity. This is done to get funds without going to the bank.
Initial Coin Offering list
On the ICO list, you can find upcoming, running and already finished initial coin offerings.
Coming: This status means that the token sale has not yet started through its future date is determined.
Running: This status means that the token sale has started.
Over: The token sale has ended.
Types of ICO Usages
There are two types of ICO usages. They are
- Crypto Coins: Crypto coins are those coins which are created newly which is different to bitcoin and has its own feature and blockchain.
- Crypto Token: Crypto tokens are those tokens which are created for new projects for which special currency is needed. The equity is raised via crowdfunding. Later, the bought equity can be sold on some specific crypto exchanges. Crypto equity is equivalent to a crypto token.
Mostly, initial coin offerings are called token generation events (TGE) as they are based on the ERC-20 protocol. The ERC-20 is a token that follows the rules on the blockchain.
Examples of The Types of Initial Coin Offerings
- New Crypto Currency: Lisk is an example of the first modular of crypto-currency. In their initial coin offerings, they manage to gather up 15k bitcoin. Their feature is the scalability, where they will use utilize side-chains as a solution.
- New Crypto Project: https://firstblood.io/ is an example of a perfect vision of blockchain startup which launched in the end of 2016.
In the current state, the developers of crypto tokens create an Ethereum smart contract. Over this contract, people register on the platform and get there wallet address.
Each ICO has its special pricing and it is divided into multiple stages. After each stage the price per crypto token increases.
An ICO crypto token can be traded on every exchange if the exchange accepts it. There are ICO specialized exchanges like Yunbi and Bittrex.
The Evolution of Initial Coin Offerings
There were evolutionary steps that ICOs have undergone. They are:
Pump and Dump Schemes by Using Bitcoin forks and Incremental Innovation
The first initial coin offerings that took place after the bitcoin blockchain network went live in 2009 were Bitcoin Forks. The bitcoin forks was a copy-paste of the bitcoin source code. Thus, new currencies and blockchain emerged. There were two techniques by which they used to manage coin issues without anybody seeing the scam:
Pre-mining: pre-mining is a technique of issuing tons of coins to himself in the first block on the blockchain. The work of the scam artists is to find buyers for their own coins.
- Fork project
- Mine at start
The creators of new cryptos always want to make their coin look special. They stated the problems bitcoin had and said they were going to be bitcoin v2 by offering incremental innovations. In the end, most initial coin offerings back then were classical Pump and Dump schemes.
Multi-Signature-Wallets are the wallets where people need to sign a transaction that it can be broadcasted to the network. These were used as a vehicle to structure crowdfunding over bitcoin blockchain.
Future Evolutionary Steps for ICO
There are some evolutionary steps for ICO which can be taken into account in future
- Regulation will get stricter and a legal ICO framework will develop. This may bring some unexpected change where big hedge funds will come join the crypto world.
- Milestone based funds releases. ICOs can be programmed to give funds by instalments. The crypto world will learn to protect itself against scammers even better.
- Stock company structure. With a good legal framework, some more legal and profit sharing ICOs may pop up.
The Evolution of Initial Coin Offering Marketing Campaigns
The evolutionary steps added to the ICO marketers are:
- Announcement threads: just go to a forum and something about the project and then wait for the investors.
- Own forums: this is used as a primary communication channel for the community and the ICO team to discuss new features and ideas.
- Bounty threads: offer rewards a crowded market your crowdfunding.
- Landing pages: a website showing information posted on the forum with a professional look.
- Telegram channels: telegram channels managed to overcome the dedicated forums. They are way easier to set up and more professional. With telegram, miscommunication will no longer happen.
- Team focusing: ICO startups need to explain among everyone else can do what they promise they’ll do.
- Whitepapers: people started presenting their business plan or tech blueprints to the interested ICO parties. Some whitepapers are very hard but sometimes reading is necessary.
- Legal form: if an initial coin offering project does not have at least one company in founding, it will be marked as spam.
- Prototype: token investors started to demand more concepts and wanted to see and click on stuff. They wanted a working prototype especially for so many underdelivers.
- Pre-commitments: a letter of intent or investment, monetary resources from the founding team. Trust will always be important when investing. So pre-commitments are necessary to deliver a good pitch.
Initial Coin Offering Services
The core initial coin offering services are:
- Programming: development of Landing Page and Smart Contracts is the main activity of this. This is the foundation of any ICO.
- Content: creating engaging press releases and white papers. Drawing graphics for the articles and website.
- Marketing: bringing the press releases to the front page of crypto and non-crypto websites. Getting the content out there.
- Socials: managing the telegrams chats. Answering all the social media and forum questions the ICO investors might have.
- Advisory: this is a strategic ICO consulting which helps in conducting the blueprints for the blockchain.
- Legal: lawyers advise on the token model and help construct a company that will acquire all the ICO funds in a legal way.