What are ICOs and why are they so important to cryptocurrencies.

What are ICOs and why are they so important to cryptocurrencies.

By CryptoChemistry | CryptoChem | 23 Jun 2020


What is an ICO?
Broadly speaking, an ICO could be defined as the way a new cryptocurrency has to finance itself before being able to go to the standard market in a massive way.

The term ICO comes from English (Initial Coin Offering) and comes to mean what translates as initial offer of a coin. In other words: the initial amount of a currency that is initially available to offer interested buyers a limited amount, and therefore coveted.

The objective of carrying out this action is none other than to raise money initially to support a new project that, generally, heads a currency as a payment method, although there are other peculiarities behind it. Thus, this limited initial offer causes more buyers to want to get hold of the currency in question, being able to raise a larger amount with which to be able to start operating in a solvent manner.

How do they work?
An ICO can be done publicly, privately, or both. The latter is what the Telegram messaging platform plans to carry out as Gram, a cryptocurrency that they plan to put into circulation at some point in the coming months. In the case of this project, it is expected that between private and public investors it will be possible to obtain between 1,200,000 and 2,000,000 million dollars thanks to the first purchases of investors in the cryptocurrency.

ICO security
Investing in projects –and even more doing it online– is something that always involves a certain risk and, also, something that still generates mistrust in a large part of the population. The reality is that ICOs do not differ too much, as we have mentioned, from traditional investments in the Stock Market, therefore they carry as many risks as benefits. If in the stock market an operation can go devilishly well or containedly wrong, exactly the same happens with cryptocurrencies.

Participating in an ICO is more or less safe from the point of view of initial investment, since for the individual user who makes such an investment, it involves no more risk than that of contributing money to a project that is trusted so that it can be put on going.

Once this is done, however, it may happen that the success of the project is not as expected, being in the virtual portfolio with some coins that not only provide extra value to the owner, but decrease it, thus losing part of the initial investment . This is part of the game of securities exchange, something to which we must also add that it is online investments, which may be subject to security problems that end with the theft of cryptocurrencies or currencies, thus also assuming the loss of the money provided.

Therefore, security and profitability are two terms that always go hand in hand in the cryptocurrency section, being subject to both the behavior of the stock market and the technologies that guarantee the correct operation of protection systems.

On the part of the individual user, who is not a great investor, the simplest is to bet on large projects, backed by known companies and which have a backing behind that provides more guarantees than that of an unknown project and of which there is not too much information.

A clear example of a successful ICO is that of the current Ethereum, one of the currencies that has grown the most in recent times and that one day managed to raise $ 18 million on its release.

How to stay up to date with ICOs to come

Currently, with this great expansion faced by cryptocurrencies, there is a general feeling that has been spreading: losing the next opportunity to join a project that generates great benefits. In this way, more and more people are closely following not only the status of cryptocurrencies in which they have investments, but also those that are going to be launched in the near future and, therefore, a potential option for support that new project.

For all those people who want to follow closely what the next ICOs are, what characteristics each of the currencies have and if it is interesting to invest in them or not, there are pages such as Coinschedule or Ico Alert, where the status of the ICOs that are currently active (what percentage of coins are left to complete) and what are those that will hit the market in the next few hours or days. This makes it easier to carry out a detailed and slow study and, with it, achieve better and more fruitful investments.

 

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