Initial Coin Offering: What Do You Understand By It
Hello great minds,
It is a wonderful opportunity to come before you all today to discuss on an issue of great importance in the cryptospace.
I trust you are all doing perfectly fine and are enjoying your activities in the community as you join hands with us to promote steemit across various social media platform.
Today being a new day, we will be discussing about Initial coin offering just as we have started few moments back.
Today, we will be examining in details another benefit of Initial coin offering.
BENEFIT OF INITIAL COIN OFFERING
- TRANSPARENT FUND ALLOCATION:
Transparent fund allocation is a very important feature of Initial coin offering, infact it can be regarded as an advantage of Initial coin offering.
In ico, transparent fund allocation helps in accountability, fostering trust and building the confidence of the investors in the blockchain based fund raising models.
Initial coin offering which is a form of crowd fund raising technique for cryptocurrency project, allows beginners to raise up capital through the issuance of tokens to investors.
The transparency associated with the fund allocation process of Initial coin offering helps to contribute greatly to the success and sustainability of the project.
Explained below are ways in which transparent fund allocation is an advantage of Initial coin offering.
DETAILED DISCLOSURE OF FINANCIAL DISTRIBUTION
One fundamental of transparent fund allocation in Initial coin offering is it's detailed disclosure of project financial distribution and project plan.
Initial coin offering unlike the traditional fund raising process operates using the blockchain technology, and this makes use of smart contract for the enforcement and execution of terms of token sales.
Through the publication of a comprehensive whitepaper, the transparency of this campaign is being achieved, and this whitepaper consist of a document that outlines the goal of the project, team members, technical details and most importantly the allocation of funds.
The white paper also include a detailed analysis on how the raised funds will be utilized, detailing the percentage allocated to marketing, development, operational cost and any other expenses.
This detailed analysis helps to guarantee that investors are given feedback on how their funds is being used.
DETERRENT TO FRAUDULENT ACTIVITIES
The transparency of fund allocation within the ico space acts as a deterrent to fraudulent activities.
The probability of investors participating in ico is higher when the investors can verify that their funds is being used for the stated purpose.
This accountability prevent fraudulent individuals from attempting to carry out fraud within the ico space,as the decentralization of the system allows for traceability of activities.
ESTABLISHMENT OF TRUST
The transparency in fund allocation plays a huge role in the establishment of trust between the investor and the project team community.
When a clear and comprehensive breakdown of how funds will be used is given to the investors, they are more likely to feel comfortable and confident in the project of the team.
In the process of fundraising campaign, one Important factor is trust and when the investor has to stake their digital asset, transparency becomes the key.
CONCLUSION
We have examined some benefit of Initial coin offering in the cryptospace.
We have seen how transparent fund allocation helps in building trust between investors and project team.
We have also learnt how it reduces fraudulent activities in the fundraising campaign process.
As we continue, we shall learn more about Initial coin offering
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