Cryptocurrencies are usually put into the cryptocurrency market through ICOs. ICO projects first appeared in 2013 but fundraising model showed a serious increase in 2017. ICOs started to be popular mainly after ICO success of Ethereum. Ethereum’s coin was sold for $0.31 during the process of ICO. Big return early investors got from ICOs is also seen as a reason for the recent rise in ICO sales.
This success of Ethereum enabled investors to explore similar opportunities, making entrepreneurs opportunistic. This, in turn, paved the way for a series of ICO project. On the other hand, the lack of regulation in the field of cryptography and the unfair investment demanded by companies to use unused products increased fraud. Regulations allow better quality and less risky ICOs and more general acceptance of crypto money.
What is ICO?
ICO is a cryptocurrency and a mass funding project that appears in blockchain market. ICO is the first digital money supply. “Crowdsale” is a mass sale activity, which is called the release of a company’s own cryptocurrency for financing purposes.
Companies sell crypto tokens that are issued at a certain amount to the target, and usually, these sales are done in return for Bitcoin, but it is also possible for companies to sell these offers for the price. As a result, the company needs capital to develop products and provide resources for the product it develops. In return, companies get the necessary capital and people who buy it get shares from crypto tokens. Those who make the transaction in the performance of this transaction have full ownership of the shares.
Companies operate an ICO to create a new blockchain and capitalize on blockchain implications. We will mention these differences in the following article. Before starting ICO, companies identify a problem in their current situation and believe that they can solve this problem through their own blockchain implementations.
In this direction, companies prepare a website and publish ICO’s requirements, specifications, team, vision, targeted industry, consultants, partnerships, roadmap and most importantly whitepapers.
Whitepaper thoroughly explains the details of a company’s approach, the specifications of any blockchain or its blockchain implications.
Protocol, Utility and Security Coin
As noted above, ICOs can raise funds for both blockchain and blockchain implementations.
For an ICO, the blockchain means that the company has created its own blockchain so that it can perform its implementations. In return for your investment, what you will receive is the coin concerning directly blockchain. This blockchain is also called the blockchain protocol because they decide on the rules, dynamics, and specifications of the applications to build on them. Ethereum, NEO, Bitshares, and Waves are examples of the blockchain protocol.
On the other hand, utility token is an implementation built into the blockchain protocol. This cryptocurrency, which is actually called a token, is only used for the application.
The best example of this is Ethereum with ERC-20 Protocol. Popular ERC-20 tokens are Tron, ICON, OmiseGo, and Waltonchain. All these applications add an additional feature to the Ethereum ecosystem since they are built on the Ethereum blockchain.
Security tokens are tokens that represent the interests of a company and may soon become illegal in most countries. These tokens are not in use, and the company behind it gains value as it continues to make profits.
What do crypto tokens do?
One of the good examples of this is Storjcoin. Storjcoins are crypto tokens that are issued by Storj.io during ICO.
Storjcoins are crypto tokens that are issued by Storj.io during ICO. Storj.io is a decentralized cloud storage system. Users may spend Storjcoins in this storage space and use them for commercial purposes like other kinds of money.
Another example is Ethereum. This system, called Ethers, is built on this platform and is used to run applications.
The tokens of the company, called Ether, are actively used to protect the running of pre-built implementations on the platform.
In general, ICO tokens can be used almost anywhere, and their use can vary according to the scope of the project.