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What Is an Initial Coin Offering?

Initial coin offering (ICO) is a modern method of raising capital that is used by the start-up companies which wishes to offer product and services that are related to the blockchain and cryptocurrency. The ICO is similar to the initial public offering and the company that wishes to raise money create a new app or coin and launches the initial coin offering. If you are interested investor, you can buy the new crypto currency token that is issued by the company. The investment can either perform poorly or give you a huge return. Investors are required to have a basic understanding of how to use the cryptocurrency wallets and exchanges.

The first step of the ICO involves the company that intends to raise the capital is to draft a whitepaper. The whitepaper has many components like the description of the project, what the project shall achieve, how long ICO shall run, capital that the startup intend to raise, and the type of payment that shall be accepted. Offering is the final version of the whitepaper. The offer contains the details of the project. Immmediately the offer has been signed, the company will announce the ICO date and marketing campaign begins. Proper marketing is essential as it will ensure that the company is able to raise enough capital. Immediately the marketing campaign is over, selling and buying of the token shall begin.

For the companies that raise funds through the ICO, there are many benefits that are going enjoy. The project is not taxed. This is very different compared to the initial public offer. There are few intermediaries that are involved in the selling of the digital coins. As a result, the person who is investing makes the decisions based on the white paper that is provided the Chris Brummer company. Another benefit that the investor shall enjoy is that there is no fee that is involved as it is in the case with the IPO.

The number of ICO in the market is increasing every day. Every week, more than 100 firms are successful. You should know that there higher the return of the investment, the more the risk that is involved. The main benefit of ICO over IPO is that you can cash in and out at any time. To know more about cryptocurrency just visit at https://en.wikipedia.org/wiki/Cryptocurrency.

Since 2013 when ICOs was introduced, it has been regulated as a method of raising capital. Due to the lack of regulation fraud and failing of companies has been reported. A lot of advocated of finance have called for the registration of the ICO as a security for a better disclosure. Financial professionals such as Chris Brummer have explained ways through which ICO should be disclosed. The professionals have also tried to find remedies of the many risks that are associated with the ICO.

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