The Impact Of IPO AND ICO On Crypto Industry

Today I will discuss about Initial Coin Offerings and Initial Public Offerings , what are they , how do they work and how a stock market industry uses it to raise their funds . We will know things that one need to keep in mind while investing or buying in regards of these aspects.

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An ICO or Initial Coin Offering is an event where an organization sells new cryptos to raise money. In exchange for their financial contributions, investors receive cryptocurrencies. In other words , in the stock market ICO is the crypto version of initial public offering IPO .

ICO is an Initial Coin Offering . It is the cryptocurrency which is equivalent to Initial Public Offering (IPO) in industry. Every company creates ICO to raise funds for producing new coin , app or service.

Whichever investor feels interested can buy into offering to own a new cryptocurrency token issued by the company.
This token allows you to use a product or service offered by the company. Or it simply represents a stake in the company or project.

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When a cryptocurrency startup wants to raise money through an ICO, it typically creates a whitepaper that outlines what the project is about, what need the project will meet upon completion, how much funding will be needed, how many virtual tokens the founders will keep, what types of funding will be accepted, and how long the ICO campaign will run.

During an ICO campaign, supporters of a project purchase some of the project's tokens with fiat or digital currency. These coins are called buyout tokens and are similar to company shares sold to investors during an IPO.

If the money raised does not meet the minimum funds required by the company, the money will be returned to the backers. And the ICO will be declared unsuccessful.

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When an organization decides to launch an ICO, it announces the rules, date, and purchase process in advance. On the ICO launch date, potential investors can purchase new cryptos.

In most ICOs, investors have to pay using other cryptos, with Ethereum (ETH) and Bitcoin (BTC) being two common options. In addition, there are also ICOs that accept fiat currency.

Basically, in purchasing process one needs to send money to a specific crypto wallet. Investors provide a recipient’s address to receive the cryptocurrencies they have purchased.
Token prices and the number of tokens sold during an ICO can be variable or fixed.

Some examples that depict the working of this process are shown below:

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The organization sells a fixed number of tokens and sets its price based on the funds received. Funding and token price are directly proportional. More the funding , more is the token price . If it sells 2 million tokens for $6million then the price of each token has to be 3$ .

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In this case, the organization sets a fixed price but does not put a limit on the number of tokens sold. For example, an organization could sell each token at $0.75 by the end of the ICO.
In fixed price and fixed number of tokens , the company has to fix all the prices ahead of time .

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Investors who want to buy into an ICO should first learn more about the cryptocurrency sector. In most ICO cases, investors must purchase tokens with a cryptocurrency they already own.

This means that an ICO investor must already have a cryptocurrency wallet created for a currency like bitcoin or ethereum. Additionally, the investor must have a wallet that can hold any tokens or currencies they wish to purchase.

One question that arises is how can individuals find information about the ICOs they wish to buy into. The best way is for interested investors to read about new products online.
There is a lot of news about ICOs, and there are many places where investors can read about new opportunities. There are many websites that provide details about all ICOs, where investors can learn about new ICOs and also compare different ICOs.

Anyone can launch an ICO , because it's entry has low barriers , therefore many types of cryptocurrencies can be launched through this process alongside making huge profits through ICOs . The only thing that makes them highly risky is their lack of regulations.

India, 12.05.2024
@moyeon