Question

Explain how initial coin offerings (ICO) have changed the investment landscape for companies. Give an example of cryptocurrency

Answer 1

Initial Coin Offerings (ICOs) provide unparalleled efficiency of capital creation mainly to startups. ICO is acting as a tool of liquidity enhancement mainly at earlier stage of business setup through crypto investors, to overcome traditional fundraising hassles for business initiatives.

ICOs are a way different from initial public offerings (IPOs). IPOs, corporate houses sell their stocks through regulated exchange platforms after years of profit making in business. Unlike ICOs facilitate the placement of a stake in a crypto project that aims to raise funds at an early stage of development. In ICOs, digital coupons are being sold as presale tokens that do not generally bestow ownership rights, to the investors via network of unregulated exchange platforms. Rewards and Risks factors in tokens investment vary from those of simple equity investment. Different from token holders, equity owners typically have a right to dividends. In the case of insolvency, they have right on the assets of the company. Moreover, unlike IPOs, even very successful ICOs do not need a financial institution as underwriters or any other for, which reduces the connected fees for the issuer. The fundraising in ICO is significantly less expensive than conventional fundraising methods because of absence of cumbersome regulatory procedures and constraints, coupled with a methodical acceptance of digital identity-based processes in place of paperwork or back office record keeping in all the phases of the process.

ICOs are also different from the crowd funding in concept. Unlike crowd funding, ICOs may involve a certain level of pecuniary stake in the business including, as the case may be, the power to say on future planning.

some popular cryptocurrency are:

bitcoin, litecoin, Ethereum,