The Process Behind The How To Launch ICO (Initial Coin Offering)
Startups typically use an ICO to raise funds. The crucial advantage of ICOs is that they eliminate intermediaries from the capital-raising process, allowing companies and investors to communicate directly. Furthermore, both parties’ interests are linked.
The Initial Coin Offerings (ICOs) in the gaming platform changed the gaming investment without precedented ways. Many founders are opting ICOs for VC funding and raising capital. At that time, for blockchain development, many VC firms are also paying close attention to ICOs. The running process of ICO is much different from traditional funding in many ways. This article explores the many way a founder must go through to launch an ICO.
Step 1: First, we need to decide on the right option for a startup with an ICO because it is not for everyone. ICO also creates the right team to opt after taking the decision.
Step 2: The first step on the journey is building a proper plan to achieve your goals after building the right team.
Step 3: Then the 3rd step is to create a product and start work on a prototype.
Step 4: A token is an investor of an ICO obtain that is a digital coin, in-game item, or loyalty point. In this step, we need to determine the type of the token issued through the ICO.
Step 5: ICOs are complicated from a legal standpoint, and it is also recommended to include a dedicated legal team who specializes in dealing with ICOs.
Step 6: The most important part is marketing with the board. Its legalities are highly specific with the marketing of an ICO. For an ICO to be successful, it needs to reach the right audience that goes live daily. So, the marketing team with the right experience will help to plan a marketing strategy with the right audience.
Step 7: Also identify the platform on which help to launch the ICO. Those are Ethereum, Waves, NEO, NXT, NEM, and others. It is also important to consider how familiar and smoother it will be to launch an ICO on it.
Step 8: We need to build smart contracts that are integral to the token sale. And also, setting up hardware and website to get the hardware right is imperative to the smooth running of an ICO.
New crypto ICOs can take two routes to fund acquisition:
Any upcoming ICO that is for anyone and everyone in public. The general public can make investments in ICOs and reap the benefits. Public initial coin offerings have become safer over time with improved scrutiny and regulation.
As the title suggests, new crypto ICOs are limited to institutional and commissioned investors. These private groups of investors set aside a certain amount of investment for lucrative projects. The company can then decide the amount of investment it needs to acquire.
How does an Initial Coin Offering work?
- It is necessary to create a detailed outline that outlines the fundraising goal, the amount that must be raised, and how the funds will be used.
- Integration with blockchain is crucial, considering how the current initial coin offering list is well integrated with the technology.
- The success rate of the ICO coin should be determined before the launch through market research.
- The overall ICO’s timeframe should also be made public.
- Like a share, a stake in an ICO crypto is referred to as a token.
- People interested in investing- purchase these tokens with cash or with other popular cryptos like Bitcoin or Ethereum.
- Tokens can be created on any blockchain platform and do not require code written from scratch. Ethereum is a popular ICO platform that supports the creation of these tokens.
- A public campaign is published if the ICO is meant for the public. A little buzz is created, so the investors understand the purpose of the ICO and are eager to invest.
- Financial institutions take charge of the listing and investments if it’s a private affair.
- If the capital raised doesn’t fulfil the minimum requirements, the ICO is declared unsuccessful, and the funds are returned to the investors.
- Whereas, if it satisfies the criteria- the funds are used to enhance the business further, and the token held by the investor can be used to speculate or hold.
Ethereum as an ICO platform
Ethereum, as a blockchain platform, has enabled several ICOs to be launched. The ERC20 is responsible for creating an open-source blockchain computation under Ethereum.
The steps to creating an ICO remain the same. However, some factors make Ethereum a more desirable option.
- Brand name and recognition: Ethereum is a market leader in blockchain platforms. Having a source code and a platform by them adds credibility to your ICO. It will take your ICO to another level.
- Third-generation platform dependency: Blockchain platforms are up and coming to attract new crypto ICOs. However, they always state they can support Ethereum on their platform, which makes the entire Ethereum ecosystem more reachable.
- Enterprise Ethereum Alliance: Its connection with Fortune 500 companies, academics and startups will create provisions to build enterprise-level software to handle complex and demanding incoming applications at lightning speed.
- Decentralization > scalability: With the steady increase in Ethereum’s efficiency, it doesn’t want to compromise on the core of blockchain, which is decentralization.
There’s still so much to be explored and understood regarding the core of New Crypto ICOs. It’s a new learning curve in fintech, which is quite steep.
Features of an ICO
Before you head on to understanding “How to do an Initial Coin Offering,” you need to know the features of an ICO:
ICOs are completely decentralized, just like how cryptos are. These tokens are tiny blockchains that are generated and transferred to the investor’s account. The founders set the prices.
Through this transaction, an investor is a participant in a decentralized economy. Here the number of coins that are generated are fixed and do not exceed that limit, ever.
An ICO could involve multiple fundraising rounds, and the initial investors are always at an advantage and can score a better return in the future.
Once the ICO is concluded, these tokens are floated in the open market, just like the shares we purchase normally.