An Initial Coin Offering (ICO) is a new way to fund new projects and businesses. ICOs work very similarly to IPOs but occur entirely online. The ‘Coins’ are virtual tokens that can be purchased using predominantly crypto currencies (Bitcoin, Ethereum, etc.) or fiat currencies. The tokens rewarded to investors and are able to be redeemed later for things related to the project (goods, services, equity) or traded for real currency.
This process of investment is very rapid as it can be accessed without middlemen and is securely maintained by the use of ‘smart contracts’, which govern the terms of the ICO. These autonomous programs remove the potential for corruption, eradicate the use of arbitration, and ensure tokens or refunds are properly distributed at the end of the ICO.
ICOs are a revolution in fundraising over traditional IPOs. They can be over in minutes with the potential to raise tens of millions of dollars. This method of fundraising is made possible with the use of autonomous programming – smart contracts which are built on the blockchain platform.
An ICO is built as a decentralized app (Dapp), that is, a program built up of multiple components (smart contracts, security, digital wallets, etc) that resides on a blockchain.
The blockchain – and thus, the Dapp – keeps an unassailable record of all transactions occurring on it. This is where the true value of an ICO begins. To participate in an ICO, an ‘investor’ transfers funds (typically Bitcoin or Ethereum) from their wallet to the wallet set up for the ICO. The blockchain network confirms the transfer as valid and the investor is granted a token from a limited pool, it’s value tied to the investment.
The blockchain secures the tokens and their initial value which will become integral to managing them in the future. As a commodity, strict rules (via smart contracts) are implemented to maintain the tokens’ integrity with the blockchain providing transparency to its transactional history. In a lot of ways, these blockchain processes become more stable and honest than traditional practices.
The intrinsic value of the tokens will be determined by the funds raised at the end of the ICO. The tokens have a secondary source of value though. ICOs are listed on a sort of ‘token exchange’ like a stock exchange where they can be bought and sold regardless of the stage of the invested project.
The benefit for companies using ICOs is in their maintenance of business control. Unlike shares, tokens can be made purely monetary and can come with no additional ownership rights. The value of tokens is driven purely by the performance of the company. Incorporating clear communication and effective marketing into an ICO is rapidly becoming more and more essential.
As a fledgling platform, it’s not unusual for terms to evolve and adapt and become confused. While the term ‘Initial Coin Offering’ may indicate a prevalence of coin trading, it is actually tokens that are purchased, valued, utilised, and traded. Realistically they should be called ‘Initial Token offerings’ so it is therefore pertinent to distinguish the difference between coins and tokens.
A coin is typically a native blockchain token that is only used for transactions. It is, for all intents and purposes, just money. Bitcoin and Ether are the two most popular ‘coins’ (among a rapidly rising amount) and have a sole purpose of storing value until traded. The ‘coin’s’ purpose in an ICO is purely for buying into it and receiving a ‘token’.
PAC has a dynmaic team of advisors and developers to provide a full-service offering. Our software engineers live and breathe Solidity. We can arrange smart contracts from simple to complex that will manage your ICO autonomously ensuring that you and your investors are taken care of at all times.
The tokens you will be rewarding are best thought of as actual money. Our team will help you decide their best value, as well as the initial release quantity to reach your business goals. We consider things like presale discounts and minimum buy-ins to find the best investors for your project.
Considering these are real value funding ventures, PAC takes security very seriously. As an online avenue, ICOs are prone to hacking attempts. We employ several mitigating processes to ensure security that not only covers server security but also user security. Deploying multiple and unique addresses for users protects the central program and hosted wallets ensures the recoverability of investor tokens.
PAC’s experience within the digital landscape has granted us valuable access to private hosting. This lowers overheads for you, and affords us immediate and unrestricted access to the platform for maximum efficiency and flexibility.
As a full service agency, PAC has years of bringing digital products and services to market. Your ICO will be supported with a comprehensive marketing campaign that includes an onboarding website. We’ll make sure everyone knows how great your project is and make it easy for them to support it.
We’ll reach out to our media contacts to get as much exposure for your ICO as we can. This can include press releases, articles, and interviews.
Our consultants are also on across the latest rules and regulations concerning ICOs and blockchain. As a nascent field, these laws are constantly changing and being revised in every country in the world and we are in the best position to navigate you through the safest processes while maintaining a broad investor base.
Contact us today to arrange an appointment and discuss your ICO project with PAC.