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ICO's: The new way for start-ups to fund their ventures

 
  Image courtesy of  CoinMarketCap

Image courtesy of CoinMarketCap

Initial Coin offerings or ICO's, have begun to grow at an alarming rate. They are essentially a way for start-ups to sell equity of their program with digital tokens that hold value. The start up will sell a certain amount of coins in order to reach a certain dollar amount. This dollar amount depends on the funding needed and is usually accepted in the form of Bitcoin (BTC) or Ether (ETH).

Ethereum is the easiest example because of its success and structure. Vitalik Buterin, creator of the Ethereum blockchain published a white paper in 2014 that laid out his plans for his blockchain. The crowdfund raised 60 million and early Ethereum investors were rewarded 2,000 ETH for 1 BTC. At the time BTC was trading around $650 and ETH around $0.40. If you were to spend 1 BTC back then on ETH, it would be worth over $450,000.

Although the ICO seems like a promising market, it is unregulated. As a participant in an ICO, you have no guarantee on return. If the product is compromised, not finished, or a scam, you're just out of luck. This is why investors must do their research when looking into ICO's. A good way to do so is to look through the white paper. This is a document the creators of the ICO create that lays out a plan for growth, a function, the underlying technology, and long term goals. You also want to research the team who's creating the program.

You can find more information on TokenMarket. They list the most popular ICO as well as tutorials and learning material from the start-ups that make it easy to do your ICO homework.