The organiser must publish a white
paper to start an ICO. This is the
document that will be read first by
potential buyers of tokens. They will
look for several key bits of information
like the benefits that the network will
bring, the team and the characteristics
of the token.
Tokens are issued by the initiator of this
ICO and can be purchased by anyone
who wants to invest in projects they
consider promising. The condition
is that the exchange is made with
cryptocurrency, often Bitcoin (BTC)
or Ether (ETH). The investor must buy
using set purchasing platforms or have
cryptocurrency. These purchasing
platforms are used thanks to the
Blockchain which is a register of banking
transactions chronologically organised.
Every block of the chain is shared on all
computers of the network and secured.
Tokens do not represent shares in
the company, unlike shares in an IPO
(Initial Public Offering). Buying tokens
at an ICO is actually pre-paying for the
product or service to be developed.
The main goal is to buy these tokens
at the very beginning of the process
when their value is still relatively low.
The value of the token will depend on
the value of the developed service. It
strongly encourages ICO participants to
be involved in the project. Following an
ICO, the tokens become exchangeable
on cryptocurrency exchanges. So the
investor has choices at the end of the
ICO to either wait for a higher value,
resell to make a profit or lose whatever
the case may be.
This process makes it possible to finance
a project sufficiently at an early stage
of development by avoiding traditional
methods of capital investments.
GUESTLIST
2018 / ISSUE 107
17
TECHNOLOGY
An ICO (Initial Coin Offering) is a fundraising method,
operating through the issuance of tokens exchangeable
for cryptocurrency during the start-up phase of a
project. This is why ICOs are also called token sales.
WHAT IS AN ICO? A NEW
WAY TO CROWDFUND
PROMISING PROJECTS
