ICO is a new cryptocurrency investment format that has gained momentum in the market. We tell you all about them and how they work.
With cryptocurrencies advancing so steadily, new modes of investment are appearing. Whether we talk about a general description of cryptocurrency or define what a token is, there are many concepts to handle. Among them we find one of the most recent and popular: ICO.
What is ICO, how does it work and how does it stimulate the security of my next digital currency investments? In this article we will make some clarifications on this notion. We will look at how it works and how it can benefit the finances of new investors.
What Are Ico’s?
ICO stands for initial coin offering. It is a type of funding done in cryptocurrencies to make a transaction more secure. It is considered a type of crowdfunding in which, in the form of a token, currencies are sold to investors or speculators.
Unlike a traditional cryptocurrency (e.g. Ethereum), a token, a reference token, is constructed to measure the initial capital of certain companies or ventures.
Such tokens are often used to avoid certain types of market speculation. While the sale of cryptocurrencies relies on the intervention of investors, specialists, fee-based platforms, banks or intermediaries, an ICO token is a single unit of a fixed amount that does not require external regulations. There is an opportunity not only to buy/sell Ethereum cryptocurrency, but also to exchange ETH to USDT to Changelly.
Types Of Ico
Following the IEBS portal, there are different types of initial transactions per token. ICOs are organized according to the type of transaction to be carried out. They are DAICO, ITO, ICCO and STO. Following these approaches, we explain what are the types of ICO:
ITO: Initial Token Offering. It consists of issuing a smart contract that corresponds to a previously established blockchain. In short, a cryptocurrency is not traded in the first instance; certain conditions are proposed for subsequent trading.
DAICO: Decentralized Autonomous ICO. It refers to an ICO model from Ethereum that grants certain rights to the cryptocurrencies we buy. The owner of the cryptocurrency has the ability to say what a cryptocurrency is intended for and to have decision-making power over the project where a token is stipulated.
ICCO: Initial Convertible Coin Offering. It allows establishing and selling shares of a token once the initial project has grown and expanded.
STO: Security Token Offering. In short, it is another version of ICO, which has certain special regulations by agencies such as CNMV or SEC. These are special tokens with a higher level of security because they are backed by private entities and come with certain legal requirements in their offerings.
How Can Ico’s Be Made Within Ethereum?
There are different ways to work with ICOs using Ethereum. However, according to the Crypto Educate portal, there are 5 steps to create an ICO safely and quickly. These steps are as follows:
Define the token: choose the operation model you want to perform with your ICO. Among them you can choose voting, investment or payment for services mechanisms.
Distribution process: create a limited number of tokens in Ethereum. They can be distributed to a group of people, as well as be traded to a certain audience.
Platform: there are many cryptocurrencies that can use tokens. However, Ethereum is the one that offers the most facilities and options to create smart contracts and, of course, ICOs.
Legal accompaniment: although ICOs, per se, are governed by a principle of decentralization and internationalization, there must be some legal control over the tokens. This means that you must register the company to which these ICOs belong and they, likewise, have the legal assistance of the country in which they are registered.
Listing on platforms: these ICOs can be distributed and sold on cryptocurrency exchange platforms. Platforms such as Changelly can help you in the latter with very effective and easily accessible tools.
Both tokens and ICOs are novel ways to set up investment projects in the world of digital currencies. In Spain, the preparation of this type of contracts and tokens for trading cryptocurrencies is very common. Through Ethereum they can be done in the easiest possible way.
The exchange of cryptocurrencies continues to advance. This includes the use of ICOs in daily operations within platforms and buying cryptocurrencies more securely. They are a safe way to start a business in this industry.