Cryptocurrency ICO Education – The Basics

Initial-Coin-Offering-ICO-600x400Over the past few months, there has been an increased focus on cryptocurrency ICOs. These initial coin offerings are a great way for investors to buy into a project at an affordable price. At the same time, the project developers try to raise as much money as possible to finish their creation as soon as possible. It is a well-balanced ecosystem, but a lot of people are still confused about certain ICO aspects. In this series, we will try to address some concerns people still have.

THE BASICS OF ANY CRYPTOCURRENCY ICO

As most people should be familiar with by now, buying into a cryptocurrency ICO is the same as backing a project on Kickstarter or IndieGala. Investors receive a reward for pledging money to the cause, even though not all of these projects may succeed in the end. Unlike traditional crowdfunding campaigns, cryptocurrency ICOs do not accept credit cards or other traditional payment methods. Most projects only accept investments in either Ether or Bitcoin, albeit some projects accept additional currencies and tokens as well.

There is another similarity to cryptocurrency ICOs and crowdfunding projects. It is always of the utmost importance to invest as early as possible. In the case of a cryptocurrency ICO, early investors often received a specific percentage of tokens on top of the regular amount. These bonuses can either be time-based or based on the amount of tokens sold already. As we have seen with a lot of recent ICOs, time to buy in is incredibly limited, though.

Even though these similarities between cryptocurrency ICOs and crowdfunding projects should not be overlooked, that is far as both concepts can be compared. With a crowdfunding project, backers can often get a refund of their money if the project fails to deliver. That is not necessarily the case with a cryptocurrency ICO, although most projects lock funds in a smart contract. By using this technology, it is a lot easier to refund investors if needed, albeit that happens very rarely these days.

Moreover, it is always a good idea to check how many tokens will be generated during a particular cryptocurrency ICO. A lot of projects issue a billion tokens or more, which theoretically makes it impossible for them to gain any major value. That is a common misconception, though, as cryptocurrency ICOs often increase their value a tenfold or more in the first few months. Most of these tokens are quickly listed on exchanges, which means there will be plenty of liquidity as well.

Speaking of the number of tokens being issued, there are two creation models projects can make use of. First of all, there is the static supply option with a predetermined value. This means a fixed number of tokens will be issued which will always be sold at the exact same price. This levels the playing field for both early and “late” investors alike. It is possible this method will be considered less attractive by speculators, since there is no option to buy cheaper coins. Then again, these tokens often see their value appreciate over time just as well as other projects.

Source: Cryptocurrency ICO Education – The Basics

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About Stephen G. Barr, Group Publisher

Author, Syndicated Columnist, Editor In-Chief and Group Publisher at SGB Media Group, a social media marketing firm specializing in digital media content production, publishing, affiliate marketing, public relations and advertising. Over 25 years experience in retailing, advertising, website & online forum development, niche social networking, affiliate marketing, search optimization, branding and identity, site location, non-profit fund raising. Event planning, promotion, production and MC/Host at public events. Author, Editor & Publisher of 35 syndicated, digital publications utilizing multiple digital distribution channels in conjunction with launching and administrating national advertising campaigns for major Fortune 500 advertisers in partnership with Google, Ning, Facebook, Myspace, Yahoo, DoubleClick, LinkShare, PepperJam and other industry leading third party affiliate networks. Product development team member from conception to launch on many websites, tangible goods and organizational structure for start ups. Specialties: Public relations, retailing, advertising, website & online forum development, niche social networking, blogging, email campaigns, affiliate/performance marketing, search optimization, branding and identity, site location, event production & promotion, non-profit fund raising and tasteful, responsible adult content publishing. An internationally recognized and read social media columnist & pundit on The Examiner, Associate Content, Vator.tv, X-Biz.net and Technorati and his own affiliated sites.
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