cryptocurrencies
When an ICO is being launched, it is important to keep in mind that a White paper must be written in which the idea of the project is explained in detail. This white paper should contain the detailed objectives and steps of the project to attract interested investors.
Another factor to take into account is that in the use of blockchain technology, related to cryptocurrencies, there must be an associated currency, known as a token. It should not be confused with the new cryptocurrency project that is expected to be launched after that ICO. These ICO Launchpad tokens are those that are exchanged for money after investment during the development process until the set objectives are achieved.
An example of this is found with the creation of the Ethereum ICO in 2014. During its launch campaign with its pre-mining system, it raised 31,531 bitcoins (15 million dollars at the time).
The phenomenon of the ether ICO marked a before and after in the world of cryptocurrencies, thanks also to the Smart Contract, colored coin in Bitcoin. It consists of a platform or program that runs on the cryptocurrency blockchain. It allows creating new cryptocurrencies on existing cryptocurrencies.
This has meant that new cryptocurrency ICOs have appeared for the sale of tokens that are based on Smart Contracts.
There are many mining methods within cryptocurrencies, two of which stand out:
- Proof of Stake (PoS) or Proof of Stake. It is a protocol in which the owners of cryptocurrencies are progressively rewarded through the algorithm. So, the more they have, the more chances they will have of receiving new ones. This model is characterized by not consuming energy to secure the system, although as a drawback it must be said that the distribution of the coins can be uneven.
- Proof of Work (PoW) or Proof of Work. In this case, the protocol requires work by the user, which will later be verified by the Network. It consists of carrying out a series of complex computational operations that must be done by a computer. Although this method was created to combat spam, it also serves as a security system for cryptocurrencies.
Advantages of an ICO
Below, we show you some of the advantages of an ICO:
- DEMOCRATIZATION OF PROJECT FINANCING
This system works similarly to crowdfunding. A community of users finances the project without the need for intermediaries, so anyone can participate without the need for prior training.
- DECENTRALIZATION OF FINANCING THANKS TO BLOCKCHAIN TECHNOLOGY
The processes of an ICO use blockchain technology, so it is developed through a secure, shared network without intermediaries.
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- ACCESS TO INTERNATIONAL MARKETS
As everything is developed on the Internet, promotions are carried out through digital marketing campaigns on social networks and sites specialized in cryptocurrencies, channels consumed by potential clients interested in investing in an ICO.
- GREAT PROFIT/LIQUIDITY POTENTIAL
This is possibly the greatest attraction of investing in an ICO. The cryptocurrency market can be a great source of income in a very short time.
- AGILITY TO LAUNCH YOUR OWN ICO
Platforms like Stellar or Ethereum allow users to launch their own ICO with great agility.
Security tips in ICO
- Analyze the project White Paper and see if it explains how the funds will be managed during the development of the project,
- Investigate the team behind it. It is important to give a face, name and experience to all the actors who participate in the project proposal.
- Keep an eye on Telegram groups and forums and websites specialized in cryptocurrencies, as the published content may have been purchased.
- Contrast the opinions and recommendations and inform yourself well about how cryptocurrencies work before investing in one and do not let yourself be influenced by digital marketing campaigns.
