How to Create an Initial Coin Offering (ICO)?

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How to Create an Initial Coin Offering (ICO)?



How to Create an Initial Coin Offering?


In this article, we want to know how to create an initial coin offering. ICO, short for initial coin offering, is a new way to raise capital for startups by selling cryptos. 


These days more and more new cryptos are entering the market and numerous initial coin offerings (ICO) have popped up lately. 


Since banks have rigorous processes for giving capital to startups, using ICOs, they can raise funds for their new cryptocurrency venture without those troubles.


Now, to know more about creating an initial coin offering, keep up reading this article. Here you can find out everything you need to know about it. 


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Basic Concepts


Before getting into talking about launching an ICO, it is better to know some basic concepts. 


What is a crypto token?


The crypto coins that are offered in an ICO project are called tokens. These tokens are like the purchased shares in an IPO. 

What is Blockchain?


Blockchain is a type of database, an information recording system, that stores information in blocks chained together. 


It is a digital transaction ledger that is public to the entire network of computer systems. This network is a peer-to-peer network. 


Each of the blocks in the chain holds several transactions along with their corresponding information. 


Blockchain makes faking or alteration almost impossible because it can be updated only if the network participants verify that, so there is no way to change it after it is updated and new data is entered. 


In other words, Blockchain is a type of Distributed Ledger Technology (DLT). DLT means a decentralized database that is controlled by many participants. 


Every transaction in Blockchain has an immutable cryptographic signature. This signature is called a hash. 

What is cryptocurrency?


A cryptocurrency is a secure form of digital or virtual money that uses cryptography for security.


It does not exist in a physical form like a coin or paper money. Although we can transfer or make payments digitally with traditional currency today, cryptocurrency works a bit differently.


Cryptocurrency uses Blockchain technology to eliminate the chance of faking or double-spending. By using Blockchain, decentralization and immutability are conceivable. 


So how is this cryptocurrency different from the traditional currency or Fiat money?


The main difference is decentralization. It means that no single authority, such as a central bank, can interfere or manipulate the balances. 


Instead of central banks or other regulatory authorities, the funds are completely under the control of users. In this way, there is no chance of freezing the account or refusing access to it. 

ICO defenition


ICO was first started in 2013 by Mastercoin that raised approximately $600,000. It was for creating a Bitcoin exchange and transaction platform.


Mastercoin is a digital currency and communications protocol layer. After the successful capital raising of Mastercoin in 2013, numerous companies welcomed the idea and started their own ICOs. 


An initial coin offering is a technique that startups and Blockchain projects use to raise capital and sell their cryptocurrencies.


It is similar to an initial public offering (IPO). It is the cryptocurrency version of the IPO. So before defining ICO, let us explain a bit about IPO. 


An IPO is when a company releases its stock on the stock exchange, and interested people can buy shares in the company for a specific price. 


In this way, they will be a partial owner of the company, and in case the company does well, the value of their shares increases, and they can yield a profit over it. 


Now, how are these two concepts different?


The difference is that ICO uses cryptocurrencies, and it is not as regulated as IPOs. Also, unlike IPOs, it does not provide investors with shares of the business. Instead, it offers cryptocurrencies to investors. 


Startup companies use it and give the investors cryptocurrencies, or as they call them, crypto tokens in exchange for their investments, to raise capital for their Blockchain-related projects. 


ICO makes the company and investors connected directly without any intermediaries in the capital-raising process. This fundraising method allows anyone, from anywhere in the world, to develop a project or company.

Is it open for everyone to launch an ICO?


Yes. Since there is no strict regulation on ICOs, anyone can try and get their currency funded. But when we say anyone is allowed to do this, it does not mean that it is easy and guaranteed that you will be successful. 


You have to consider all the things that may get you in trouble while doing that. Launching a project requires understanding Blockchain and cryptocurrency well. 


Therefore, it is better to work with people who have related experience and can help you with it, someone who can tell if it is a good idea for you or not. 


You or other people who are about to work with each other have to research and get information about this business before taking any actions. 


If you considered all the aspects and came to the conclusion that you can do that, you can go on and create a whitepaper for your ICO project. Do not forget that this part is so crucial. 


Every detail about your currency and your innovative idea has to be mentioned in it. 

How to launch an ICO?


In this section, we are going to explain how to create an initial coin offering. So if you are considering getting into that, keep up reading this part. 


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1. Researching and coming up with an idea


The first thing that you have to do to find out how to launch an ICO is researching. You need to get the knowledge of the industry. 


Do not forget that the most fundamental question is whether the initial coin offering is beneficial for your business. You have to research and decide if you need to use ICO or not. 


Understanding the market and your target audience is so crucial. 


You have to realize the market demands and deficiencies and try to find solutions while designing your ICO. 


As you want people to invest in your project, there should be something different about your project than other competitors. 


 



2. Considering your country’s regulations


Not all countries in the world accept ICOs. So you need to find out if the country you are about to start your project in has banned ICOs or not. 


For example, South Korea and China are two countries that do not allow ICO projects because of the increasing number of scams.  


 



3. Releasing a whitepaper


After researching and checking out the regulations, you have to publish a whitepaper. 


This whitepaper is a document that describes some details and information about the project. The data outlined in the whitepaper can vary from company to company. But it may include the followings: 


The project main concept and goals, the amount of money that is needed for this project, what types of currencies are acceptable, how long the ICO project will run, what happens after the project completion, and some other useful information.


To do this an expert who has enough knowledge and skills in writing ICO whitepapers is needed.


 



4. Setting up an expert team


To launch an ICO, one of the most crucial steps is creating your team. 


You have to gather professionals and experts together so that you can launch a successful ICO. Your team must include some managers to control the procedures, top-notch developers with knowledge in different programming languages to handle problems, marketing specialists to promote your project, etc.


 



5. Creating your crypto token


The next step to launch an ICO is creating a crypto token. You may be wondering about how to create an ICO token. 


It is actually so simple because there are some available platforms so that you can sell your tokens to investors. After the sale, the tokens will be transferred to the investors’ accounts. 


 



6. Launching your ICO website


Now that you have done the research, released a whitepaper, set up a top-notch team, and launched your tokens, you have to create a website for your ICO. 


On your website, you have to give useful information about your project. For instance, what is your project, and why people should participate in it, what is the project roadmap, who are your team members, etc. 


Make it as simple as possible. It has to be short and easy to understand. 


 



7. Advertising your ICO


So, you did all the previous steps, and you are ready to promote your project. 


Now, you have to choose a professional marketing agency to handle the PR. Talk to them about everything you want about advertising your project, and then let them do their job. 


 



8. Launching your ICO 


Well done! Now you can launch your initial coin offering. It can be open for a few weeks or a month and sometimes even longer. 


It is better to check out other successful ICOs to see how long your project is better to be open. 

ICO advantages


Initial coin offerings have extensive benefits for founders as well as investors. Here we listed some of them for you. 


 



1. No geographical boundaries


Since ICOs use cryptocurrencies, they are available for anyone everywhere in the world. 


It is all about global accessibility. Startups can raise funds from wherever they are and from whoever they want. There are no geographic boundaries. 



2. More liquidity


Lack of liquidity is the biggest problem in investments. ICOs enable higher liquidity and more fluidity of funds than company shares by using tokens. 


These tokens have value even at the moment they are purchased. In this way, investors have the opportunity to make considerable gains quickly.



3. Low competition


Initial coin offering is a new concept in the business and technology world, so many people are not familiar with this method yet. 


They still use traditional fundraising methods for their projects. This means there is still no high competition in this area. 



4. Anyone is allowed


Anyone can buy the tokens and even sell them internationally and take advantage. Participating in ICO projects is not limited to just some accredited investors. 


Besides, you can invest any time you want. You can be one of the early contributors by being watchful enough to purchase tokens as soon as the launch.



5. No middleman


As you purchase cryptos in ICOs, there are no intermediaries between you and the person you want to sell the tokens to. 


You can buy the cryptos you purchased as soon as they are created and sell them immediately. The price of tokens can vary; this means there is a great chance of making a considerable profit.  

Final words


So, we explained everything you have to know about how to create an initial coin offering. If you are still determined to launch an ICO, keep going step by step and get it done.

FAQs


What does ICO mean?


An initial coin offering is a technique that startups and Blockchain projects use to raise capital and sell their cryptocurrencies. It is similar to an initial public offering (IPO). 


The difference is that ICO uses cryptocurrencies, and it is not as regulated as IPOs. Also, unlike IPOs, it does not provide investors with shares of the business. Instead, it offers cryptocurrencies to investors. 


 



Is ICO safe?


Maybe it seems an incredible opportunity, but there are significant risks involved that you have to be careful about. 


The project progress is not fully transparent, and you do not know how exactly it is going. You have to make sure that the company and its team are experienced enough to fulfill their promises because there is no guarantee to return your funds if it does not go as expected.


As you know, ICO projects are all about cryptocurrencies. Due to the price volatility of cryptocurrencies, the investment in them is also unstable.


The most important thing is that there is always a potential risk that the project being a total scam. 



How much does it cost to create your own cryptocurrency?


There is no right answer to this question because the cost to launch your cryptocurrency varies. 


It depends on multiple factors such as the Blockchain you want to use, the development process, the way you want to advertise it, etc. You have to consider each of them in detail and find out the costs. 





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