Unless you have been literally living under a rock for the past year, you must have heard the term ICO, even if you don’t quite know what the three lettered term means. ICO stands for Initial Coin Offering, a novel way to raise funds ushered into vogue after the second generation of cryptocurrencies spearheaded by VitalikButerin’s Ethereum saw blockchain technology supplemented by smart contracts. Simply put, smart contracts are digital contracts that allow conditional fund transfers, in most cases of cryptocurrencies without a third-party escrow. Armed with the power of trustless automated contracts the world of blockchain and cryptos saw the rise of ICOs, the next evolution of kick-starter style crowdfunding, giving birth to numerous novel, innovative and ambitious projects, that would have probably never seen the light of the day via a VC funding route.
Though ICOs started as early as 2013, with Ethereum itself raising capital through the sale of its tokens in 2014, it was in 2017 that ICOs of coins and tokens reached a fever pitch, with numerous projects raising several hundreds of millions of dollars. Ethereum has been the platform of choice for most startups to do their ICO as it is the progenitor of ERC20 type tokens, a type seen most commonly associated with native tokens of new blockchain based projects.
ICOs have not just enabled entrepreneurs to launch global level projects without getting caught in the hassle of numerous cross-border technicalities that traditional startups face, but have also given retail investors a chance to participate and be a part of businesses that have gone on to give returns of the order of 30X the initial investment. It is akin to IPOs although tokens do not give ownership to the holder, only allows them to contribute to the fund-raising and gaining profits as token value rises with time. Despite the negative attention garnered due to scams and projects failing quickly once funds have been raised, there have been good genuine ICOs that have gone on to become successful, viable and highly profitable businesses.
It is quite lucrative to participate in an ICO provided you thoroughly research the project you are putting your money in and are fully aware of the associated risks. There are many upcoming projects you could look intoif you want to give ICOs a shot. One such project is idap.io which is the first complete derivatives ecosystem and is paving the way for tomorrow’s digital economy. The team is from India, comprising four engineers, three of whom have been traders for the last decade and after making the shift to crypto trading decided to come up with an exchange that solves many problems present in the landscape. The details of the ICO are transparent and you can do your due diligence by reading the White Paper, exploring their site and watching product demos. For traders looking to get into crypto, this ICO is highly recommended.