ICOS is one of the many alternative strategies being adopted by a new company to raise funds for their projects and ventures. Till a few months back, startup companies were looking for investors and were parting with some of their stakes to get funds. The investors finance the projects, if they find it suitable, with a belief that in the future, they will get better returns than what they had invested. However, today the concept and strategy are different. People are using digital currency to raise funds in a more clear, transparent and rapid manner. This is what ICOs is all about.
ICOS means Initial Coin offerings. The digital currencies are called tokens. The tokens are to some extent like how stocks and shares work in the public market. The main difference is the investors do not own the tokens as they do in the stocks nor do they get any dividends. The cryptocurrency runs on speculation. If it appreciates in value, the investor gains profit.
Cryptocurrency is highly volatile and can be a high-risk investment. Nevertheless, it is getting more and more popular and people are showing keen interest on investing in it. They are very much motivated with the success of bitcoin and has attracted both professional investors and raw enthusiasts looking to make some money.
ICO funds are floated usually in Ethereum (ETH) or Bitcoins (BTC). A new address is created and displayed on the website of the new project. It is similar to opening a bank account. Investors send the cryptocurrency (BTC or ETH) to the address to purchase the tokens. The digital currency is used by the project (fundraiser) for their expenses and can sell the bitcoins /ethers to raise fiat currency for the project. The project initiators typically give details of how they will utilize the funds collected. There is a minimum and maximum amount listed. If the project fails to reach the minimum, it is discontinued and investors are refunded their investment. If the maximum is reached, new coins are not issued.
Each project is unique and the results may vary. If the value of the tokens rises, investors can sell and make huge profits. The market is optimistic about the success stories being heard in the last few months. Bitcoin and Ethereum are two examples of how investors can gain and make money though there are a few that have failed and people did lose money.
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