What is ICO?
ICO - Initial Coin Offering is sometimes called IPCO - Initial Public Coin Offering is a startup fund that aims to raise capital by distributing some of the resources to people who have decided to support it.
With ICO we usually deal with before the project is completed, but funds can also be used to provide technical support for an already operating currency. The additional advantage of ICO is that supporters who believe in success will tell others about the new project by raising awareness in the cryptanalyst community. This also ensures a more fluent currency.
This method of fundraising can also be controversial due to possible fraud, such as the Ascendancy project, or even with Trojans like OXN Oxencoin.
At the same time easy to find successful currencies like Etherum, Bitshares, NXT, Factom and Mastercoin.
The ICO is usually advertised on a cryptowalk forum like Bitcointalk. The idea is presented along with documentation, objectives and other information that will help future investors to understand and evaluate the project. Naturally, the preferred option is Bitcoin or another stabilized cryptanalyst. After the ICO is over, the new currency is launched and goes to stock exchanges where people who supported the project can start trading with ICO funds.
Advantages and disadvantages
It is definitely an advantage to have the resources necessary to supervise and support the project. The idea goes directly to potential customers, and developers gain trust by presenting all the information they need.
It can not be hidden that on the other hand all ICO can be a fraud. Promises are not met and ideas are never put in place. People who believed in the presented vision and counted on a successful investment ended up with nothing. This changed the approach to the ICO to be more skeptical, damaging the environment as a good project could be considered a further scam.
As a result, rules have been worked out to ensure that users should not be deceived:
Developers should provide a well-technically substantiated reason why protocol and currency make sense of existence.
Communication between the team and the community must be fully open and honest.
The project needs a beta or test protocol to show developers can accomplish what they promise.
Funds transferred within the ICO to the extent possible should come directly from the chain of blocks.
It is good to have a certain amount of money collected in the ICO - we all know that entrepreneurs would like to collect as much as possible, but setting a limit will show that the team has a plan in place. Let's remember that this is the first phase of the project, and if it succeeds, additional resources will appear very quickly.