The blockchain ecosystem offers a growing number of investors new avenues to make money. While many buy tokens or trade digital currencies, a new investment option involving Initial Coin Offerings (ICO) is now becoming common. With the popularity of ICOs undisputed, understanding how to participate in crypto ICO or knowing where to purchase ICO in a legitimate way often remains a challenge for many.
This proliferation of platforms is why you must choose the ICO token exchange or platform carefully. Popular exchanges like Binance, Coinbase, Gate.io, Huobi, and Kraken amongst others typically offer a launchpad platform where new tokens raise capital through crowdsale. Amongst these options, you need to decide on which platform to pitch tents with.
Most token sale processes usually involve Know Your Customer (KYC), and Anti Money Laundering (AML) checks. It is also good to decide where to buy your ICO tokens in advance as some platforms may not be available in your region due to regulatory compliance. Knowing which ICO exchange operates in your area will save you time in your ICO investment pursuit.
After you must have registered on an exchange where you can purchase ICO tokens, you will need a funded account. As a crypto-related investment, you will need to have a wallet set up with the right cryptocurrency to participate in the token sale.
Token sales can be a very risky investment. It is advisable for prospective investors to do their due diligence before committing their capital. Unlike in the broader financial market where startups raise money through Initial Public Offering (IPO), there is no one to hold if the investment fails. This level of risk is why many governments go against plans to offer an ICO.
*Note: developers have the full freedom on how they want to setup the token sale. Covering every possible ICO scenario is almost impossible. A developer might decide not to sell his tokens at a fixed exchange rate but rather let people invest in his startup and then distribute the new tokens proportionally by giving each person a percentage of the tokens corresponding to the percentage of his investment which is part of total investments. In this case if a startup gets a single investor he/she will get 100% of the tokens. Another option would be a dutch auction as presented by the Gnosis team for the first time, where the sale starts at the highest price per token proportionally decreases until the end of the auction.
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An Initial Coin Offering (ICO) for cryptocurrency is like an Initial Price Offering (IPO) on the stock market, but instead of buying stock in a company, you buy digital coins. In both cases, it may help to think of these as public crowdfunding efforts where investments in a new company are rewarded with assets related to the value of the company (although not always directly with an ICO). 59ce067264