What role does ICO play in Cryptocurrency?

ICO is the acronym of Initial Coin Offering. When a new crypto-token or a cryptocurrency is launched, the respective developer offers some unit of their stock in the exchange of other major coins present in the market like Bitcoin or Ethereum.

It is safe to say that ICO plays the role of an amazing tool which can rapidly bring the development funds so that new cryptocurrencies can be supported. The tokens offered by ICO can be sold as well as traded on the cryptocurrency exchanges depending on the demand.

Ethereum ICO has one of the notable successes and the popularity is growing day by day. A few years back, Ripple was the first cryptocurrency which is distributed through ICO. In the early days of 2013, the ripple has initiated the payment system which is generated approximately 100 billion XRP tokens.

Apart from these, there are other cryptocurrencies which are successfully funded via ICOs. In the year 2016, Lisk has collected $5 million through ICO. However, so far Ethereum is the most prominent ICO that took place around 5 years ago. During that period, Ethereum has sold out around 0.0005 ETH in exchange for each Bitcoin that raises almost $20million.

Ethereum has paved the way of ICO by harnessing the smart contract power. Besides this, the legality of ICO is a complex system. Theoretically, tokens are sold as digital goods despite financial assets.

Despite the regulator's effort, ICOs are still surviving in a legal area and is continued until the regulations are imposed and are attempted to benefit the ICO.

Here, are the characteristics ICO include:
● Normally, ICO coin sells the participation of the economy whereas the token sells the ownership or royalties.
● Token owning not always give the right to the user to vote while with the ICO the rights are embedded within the ICO while the investors have input throughout the lifespan of the project.
● ICOs are commonly defined before the actual sale so that a number is defined according to the need.
● ICOs have multiple rounds to raise the fund along with the coins, increasing the value till the release date with investors which gives embedded rewards from within.
● ICOs gathers the information coins or tokens that can be tradable in the cryptocurrency market.

The advantage of the ICO is that it subjects to directly to the economy and the taxation which in result affects the fundraising. ICOs mainly focus on the capital raise of the company, it is beneficial for the startup. These are used to kick-start the sale i.e taken by the market or the new cryptocurrency.

In most of the cases, the investor is the consumer who is offered by the consumer to raise the funds via ICO, that allows the investors to purchase coins at a discount rate.

Generally, there are two ways to release the tokens in the blockchain. Gather a specific amount i.e outlined by an offer and then tokens are distributed as per the initial investment. Otherwise, tokens are traded on the cryptocurrency tokens which signifies the tokens are released in exchange of trading.

This definitely shows that the investors are spending money on ICOs which shows this in certain shows the projects and the business models are just perfect and the valuation of the cryptocurrency rises. Hence, this way the investment is justified and the stability, the value needed by the business is commendable.