Introduction to the World of ICOs and Who are the Biggest Beneficiaries

 

The drive to discover various ways for new companies to raise cash has birthed so many ideas and experiments. However, if the current statistics are anything to go by, nothing is more prominent than ICOs. ICO stands for Initial Coin Offering. Thanks to the rise in digital currencies, the past couple of months has seen a paradigm shift in how companies raise cash. Decades ago, a company founder would sell their ownership stake to a venture capitalist in exchange for cash. This investor believes that their new shares in the company will be worth a lot in the future as compared to the cash they get to spend at the time of purchase.

 

ICOs work more or less the same way, only that it is a more transparent, democratic and faster way of raising funds through digital currencies. This is a new craze that gives a significant opportunity to both the venture capitalists and company owners. It is a win-win situation for both but only when transacting with genuine venture capitalists. ICO marketing entails selling a digital currency at a discount. This currency is referred to as a "token." Should the token appreciate in value, i.e., the digital currency appreciates beyond its initial purchase price, the investor would have made a profit. It works more or less like investments in the stock market.

 

However, unlike in the stock market, the purchase of the token does not in any way transfer ownership to the investor. It doesn't confer any rights to ownership or entitle the owner to any form of cash flows such as dividends. The significant rise in ICOs is largely motivated by the exponential growth in the value of digital currencies. Bitcoins, for example, seem to be on a consistent increase no wonder both professional investors and fanatics were introduced to ICOs. That said, it is important to mention that ICOs are most successful for the companies that have fully embraced the blockchain technology. The attention and froth surrounding ICOs, should, thus not be taken lightly and have companies transacting blindly. For more ideas about cryptocurrency, visit http://www.huffingtonpost.com/news/forex-trading/.

 

It pays to do your thorough research. For starters, knowledge is power so take the time to understand the ins and outs of digital currencies. There is a lot of information out there surrounding the blockchain technology. You can only make an informed decision and ensure you are getting the most out of whatever transaction when you are well informed.