ICO refers to “Initial Coin Offering’. It is somewhat the same as what we call an IPO in the shares market.

Entrepreneurs looking to launch a new cryptocurrency can do it through an initial coin offering (ICO).

ICOs are another type of cryptocurrency that companies utilize to raise funds. Investors acquire unique cryptocurrency “tokens” in exchange for their monetary investment in the business through ICO trading platforms. It is a type of crowdfunding in which a digital token is created and sold to raise funds for a project’s development.

Initial Coin Offerings (ICOs) can be considered as an innovative way of obtaining funding, promoted by entrepreneurial companies that base their business projects on a new technology known as a blockchain. This provides a chance to the budding start-ups to get the investments for their business. All they need is an elite plan on paper and get some crypto coins in their account.

There stands a little to no government regulation on the sale and purchase of ICO, which has raised a lot of eyebrows to be the whole concept to be very risky and speculative. A system without regulation poses a major threat to its adoption and can give an impotent rise to fraudulent activities.

There exist different kinds of IPO, though they are mainly categorized in public and private.

PRIVATE ICO

Only a small number of investors are allowed to participate in private initial coin offerings. In general, private ICOs are only open to accredited investors (financial institutions and high-net-worth people), and a company can choose to set a minimum investment amount.

PUBLIC ICO

Initial coin offerings (ICOs) aimed at the general public are a type of crowdfunding. Because practically anybody can invest in a public offering, it is a democratized type of investing. Private ICOs, on the other hand, is becoming a more viable choice than public offerings due to regulatory issues.

SAFT

A SAFT is a type of fundraising for digital-currency businesses that are targeted at accredited investors and provides tokens when the project or company goes live. While a SAFT sounds very similar to a traditional ICO, the distinction is that in an ICO, tokens are released right away, whereas, in a SAFT, tokens are promised to be delivered later.

IICO

An interactive initial coin offering (IICO) is a sort of ICO in which each investor’s purchase amount is limited. As a result, more people are inclined to participate. It has a good regulation as the investment amount is bracketed with certain limitations, keeping a balance out in terms of its regulation and the risk associated with the trading.

AIRDROP

The company gives away cryptocurrency in the form of an airdrop. They assist in the free distribution of a modest number of tokens to investors and others interested in participating. Even though the model-based tokens will be given away, some will be reserved by the trading team. They are given either as a result of holding another token or just by being an active wallet address.

STO

A security token is a one-of-a-kind token that represents a stake in an external asset or organization. Security tokens can be issued by governments and enterprises to fulfill the same purpose as stocks, bonds, and other equities.

Keeping a small cache of currencies, particularly ones from ICOs, isn’t always a bad idea if you want to buy and hold. The only caution that should be kept in mind is don’t invest more than you can afford to lose, and diversify your portfolio to mitigate the risk of ICOs.

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