ICO (Initial Coin Offering) on cryptocurrencies
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What is a cryptocurrency ICO? How to participate in a cryptocurrency ICO? What are the risks involved in participating in a cryptocurrency ICO? Let’s try to clarify these points here.
ICO stands for "Initial Coin Offering”. It is the initial fundraising that will eventually create a new cryptocurrency.
By participating in a cryptocurrency ICO, you participate in a project’s initial fundraising and your participation lets you acquire a cryptocurrency before it is tradeable on various cryptocurrency trading platforms.
Participating in an ICO is riskier than buying a cryptocurrency that is already listed; however, each ICO that went well generally allowed investors to multiply their initial contribution 10+ times. This does not include the increase that generally follows the first listing on the main trading platforms.
For your information: to date, as soon as a cryptocurrency became tradeable on Binance/bittrex or any major trading platform, its price increased by at least 30% each time. Some crypto traders wait for these announcements to position themselves.
[/h2]How to participate in an ICO?[/h2]
First of all, it is important to consult the "white paper" for the future cryptocurrency. The project must be "revolutionary" and be meaningful to you. If not, do not invest in this ICO.
There are generally 5 steps for an ICO:
Investors register on the future cryptocurrency’s site. There is generally a race for places so as to ensure participation in the ICO; only the first to register will have the opportunity to participate in the presale.
To register, you usually just need to fill out a form and send a copy of your passport.
Only investors whitelisted in step 1 can participate in the presale, knowing that the presale generally offers the best "bonuses". During the presale, only the first part of the fundraising is available. Investors generally have a minimum and maximum investment not to exceed.
The second and final part of the fundraising is open to all investors. Participation can be limited to a certain amount (to ensure that large investors do not take it all).
Investors receive X amount of cryptocurrency tokens in their wallets. These tokens will then be transformed into the final cryptocurrency.
The cryptocurrency can be traded on various cryptocurrency trading platforms. Investors who participated in the ICO can then resell the new cryptocurrency to new investors interested in the project. This is usually the time for ICO participants to make a profit. But some investors put their investment to one side and take advantage of a new surge in the price. It's the law of supply and demand.
There is of course advertising. Cryptocurrency trading platforms are the first to promote the various ICOs. But before any advertising takes place, ICOs are generally already anticipated by investors browsing various social networks (reddit, twitter, telegram, etc.).
Three elements attract investors in an ICO:
More concretely, the company issuing the ICO offers, for example, 100 XXX of the new cryptocurrency for 1 Bitcoin. Investors participating in the presale receive a bonus and can for example receive 150 XXX for each Bitcoin invested.
Some specialized cryptocurrency ICO sites offer tools for measuring the strength of the project’s Telegram or Twitter community. I suggest that you review these tools here: The ICO with the most Telegram subscribers, or the ICO with the most Twitter subscribers:
NB: the best way to use these tools is to only select upcoming ICOs where you can still register on the whitelist to participate in the presale and potentially benefit from a bonus (if there is a presale bonus.).
You have to realise that there are a lot of "SCAMs", companies who launch a cryptocurrency without the slightest project behind it, only to make an ICO (then a cryptocurrency) to raise a lot of funds for themselves. So avoid investing in just any old ICO. Find out before you get into it. This is THE MOST IMPORTANT STEP.
Another risk is not seeing the ICO finalized. Funds sent by investors are generally lost. And the company pockets it all without having to give you anything in return.
An ICO can generate a cryptocurrency that will never be quoted on a trading platform. You hold a cryptocurrency (which is worth 0 or millions of euros), but it is impossible for you to resell it.
There only remains human risk; the wrong address details for receiving the tokens. Or a premature attempt to resell the tokens. Any foolish actions that could cost the investor everything. (e.g.: a typing error when entering the address of a wallet to which you must transfer funds to participate in the ICO, or a typing error when entering the address of a wallet belonging to you.)
Additional topic: Risks of Cryptocurrency Trading
What is an ICO?
ICO stands for "Initial Coin Offering”. It is the initial fundraising that will eventually create a new cryptocurrency.
By participating in a cryptocurrency ICO, you participate in a project’s initial fundraising and your participation lets you acquire a cryptocurrency before it is tradeable on various cryptocurrency trading platforms.
Participating in an ICO is riskier than buying a cryptocurrency that is already listed; however, each ICO that went well generally allowed investors to multiply their initial contribution 10+ times. This does not include the increase that generally follows the first listing on the main trading platforms.
For your information: to date, as soon as a cryptocurrency became tradeable on Binance/bittrex or any major trading platform, its price increased by at least 30% each time. Some crypto traders wait for these announcements to position themselves.
[/h2]How to participate in an ICO?[/h2]
First of all, it is important to consult the "white paper" for the future cryptocurrency. The project must be "revolutionary" and be meaningful to you. If not, do not invest in this ICO.
There are generally 5 steps for an ICO:
Step 1: whitelisting investors
Investors register on the future cryptocurrency’s site. There is generally a race for places so as to ensure participation in the ICO; only the first to register will have the opportunity to participate in the presale.
To register, you usually just need to fill out a form and send a copy of your passport.
Step 2: public presale
Only investors whitelisted in step 1 can participate in the presale, knowing that the presale generally offers the best "bonuses". During the presale, only the first part of the fundraising is available. Investors generally have a minimum and maximum investment not to exceed.
Step 3: crowdsale or open public sale
The second and final part of the fundraising is open to all investors. Participation can be limited to a certain amount (to ensure that large investors do not take it all).
Step 4: token distribution
Investors receive X amount of cryptocurrency tokens in their wallets. These tokens will then be transformed into the final cryptocurrency.
Step 5: exchange trading or listing on trading platforms
The cryptocurrency can be traded on various cryptocurrency trading platforms. Investors who participated in the ICO can then resell the new cryptocurrency to new investors interested in the project. This is usually the time for ICO participants to make a profit. But some investors put their investment to one side and take advantage of a new surge in the price. It's the law of supply and demand.
How are investors attracted to invest in ICOs?
There is of course advertising. Cryptocurrency trading platforms are the first to promote the various ICOs. But before any advertising takes place, ICOs are generally already anticipated by investors browsing various social networks (reddit, twitter, telegram, etc.).
Three elements attract investors in an ICO:
1/ the quality of the project
, the better its partners and the blockchain on which the ICO is generally launched, the more the amount of fundraising is adequate for the project’s needs, the better the ICO. Companies with a small project but raising astronomical sums are generally SCAMs. Companies with very large projects, but raising adequate sums to bring these projects to fruition, are considered as good ICOs.2/ bonuses.
From 20 to 50%, they decrease sharply between presale and public sale. This is why investors tend to rush whitelisting ;)More concretely, the company issuing the ICO offers, for example, 100 XXX of the new cryptocurrency for 1 Bitcoin. Investors participating in the presale receive a bonus and can for example receive 150 XXX for each Bitcoin invested.
3/ the community supporting the project
. The larger a community following a project and its ICO, the more presale and crowdsale participants there are, and the more potential there is for active traders on the cryptocurrency when it is finally quoted on a cryptocurrency trading platform.Some specialized cryptocurrency ICO sites offer tools for measuring the strength of the project’s Telegram or Twitter community. I suggest that you review these tools here: The ICO with the most Telegram subscribers, or the ICO with the most Twitter subscribers:
NB: the best way to use these tools is to only select upcoming ICOs where you can still register on the whitelist to participate in the presale and potentially benefit from a bonus (if there is a presale bonus.).
The risks of investing in an ICO
You have to realise that there are a lot of "SCAMs", companies who launch a cryptocurrency without the slightest project behind it, only to make an ICO (then a cryptocurrency) to raise a lot of funds for themselves. So avoid investing in just any old ICO. Find out before you get into it. This is THE MOST IMPORTANT STEP.
Another risk is not seeing the ICO finalized. Funds sent by investors are generally lost. And the company pockets it all without having to give you anything in return.
An ICO can generate a cryptocurrency that will never be quoted on a trading platform. You hold a cryptocurrency (which is worth 0 or millions of euros), but it is impossible for you to resell it.
There only remains human risk; the wrong address details for receiving the tokens. Or a premature attempt to resell the tokens. Any foolish actions that could cost the investor everything. (e.g.: a typing error when entering the address of a wallet to which you must transfer funds to participate in the ICO, or a typing error when entering the address of a wallet belonging to you.)
Additional topic: Risks of Cryptocurrency Trading
