Contest Alert 📢: S4B Crypto Contest - Season 20

source

INTRODUCTION

Steemians, this is another week to interact and exchange ideas on a highly beneficial topic of discourse. In the cryptocurrency space, a lot of information exists that any crypto enthusiast could explore to have the needed knowledge and skills required to navigate and succeed there. This platform has been on the edge to driving such information to members of this platform. I would personally say ‘kudos to @waqarahmadshah’ for his unflinching support and efforts to keep moving this community forward by always hosting a contest that builds our knowledge on crypto related topics.

I now move to today's topic to deal with it right away!

THE MEANING OF ICO

source

In the formal business space, new or existing companies may decide to seek external funds to help them meet or raise the needed capital to fund the business. To raise the amount of money needed, they go through a process called the "Initial Public Offering,” IPO. During this process, shares would be offered to the public for them to subscribe. People would then subscribe to those shares at different amounts. By the virtue of their subscription to the company's shares, they have become a part owner of the company of which they would be entitled to the dividends that would be given by the company in the future.

This is what ICO, (Initial Coin Offering) represents in the cryptocurrency space. Blockchain based Companies initiates cryptocurrency projects requiring huge amount of capital to launch. To source for funds in building the crypto project, they issue what is known as Initial Coin Offering (ICO) to people. Now in the place of shares being issued in formal business settings, blockchain based Companies issues tokens or digital coins to the public to acknowledge their investment stake in the project.

THE MAIN PURPOSE OF ICO

Blockchain based Companies' main purpose of ICO is to raise the needed capital sum to fund their projects. When ICOs are offered, it enables the company's entire growth process as the funds raised would be used to in areas such as the following:

• It enables them to under go research and development on new projects to launch.

• It helps them to fund the creation a decentralized application platform for the project.

• Used to create new coins or tokens that could used in the platform or for the project.

• ICOs could be Utilized to also fund their existing projects.

The risks investors could face when participating in ICO

source

There are quite a number of risks investors could face when participating in an ICOs. Such risks includes:

• It could be used for scam or be fraudulent

• There may be the absence of openness or transparency

• Investors could suffer loses

• Funds could be stolen as the platform could be attacked by hackers

• Investors could face the risk of having serious challenges when trying to swap or exchange their tokens for another.

MY PAINFUL EXPERIENCE OF ICOs

source

Yes! I have participated in several ICOs that failed me. When the projects were launched, they came with a lot enticing promises that attracted investors. They offered rewards to investors who purchased different packages at various levels. There were also referral rewards for those who invited others to the project. A lot of campaigns were made on the project through seminars and different clubs were formed.

Finally when the projects were launched and fees were paid to claim the the tokens together with the rewards. I could not swap or exchange the tokens for another. The tokens were now dumped on us the investors and till today, my several million tokens are worthless.