Blockchain ICO is a means to raise multimillion-dollar investments

Blockchain ICO is a means to raise multimillion-dollar investments

For the first time the blockchain was used to collect investments relatively recently, in 2013. But ICO gained worldwide popularity in 2016-2017.

Promising ideas attract millions of dollars on platforms popular among cryptocurrency investors with minimal advertising costs.

What is blockchain ICO?

Blockchain is a kind of registry for storing data, however, it is not located in one place, but it is distributed among hundreds of computers participating in the blockchain system. Information about all the transactions that have ever been conducted within the system will forever become part of this chain.

Distributed storage system eliminates the possibility of hacking or manipulation. The information is hashed according to a complex mathematical algorithm, accessible to an undefined and optional group of computers participating in the chain.

So, any data gets the maximum degree of protection and anonymity, because it is almost impossible to trace all the stages of the encoding.

The emergence of ICO was a breakthrough in the field of transnational investment of utility, manufacturing and financial projects.

ICO is the initial offering of tokens and their subsequent sale to potential investors. The developer places information about his idea on the appropriate platform and users who believe in its prospects can become its sponsors. To do this, they need to buy tokens for cryptocurrency set by the author. In the future, they can be used to purchase the final product at significant discounts or tender for a more profitable resale.

Advantages of ICO over other methods of attracting investments

When launchingblockchainICO, it is possible, depending on the essence of the token, to avoid government control.

The author has the opportunity to cooperate with investors directly, and such relations are built on pure trust. The main advantages of this form of fund-raising are:

• high speed of organization;

• affordable cost (10 - 50 thousand dollars);

• the cost of coins is established by the issuing company;

• suitable for start-ups.

The main stages of blockchain ICO

1. Pre-announcement is a preliminary presentation to potential buyers. It is used to analyze whether the product is interesting and to which extent it is interesting, what details were missed in the business plan, and what should be emphasized to the investors.

It can be held many times until a competent, relevant and informative presentation is formed. Based on the conclusions obtained during the pre-announcement, the next stage of blockchain ICO is created.

2. Company registration for ICO is an important stage in the campaign to raise funds, but many miss it. Today, only a few countries have approved bills regulating ICO. In most world jurisdictions, ICO remains in “gray zone” of the current legislation.

Certain founders take advantage of this state of affairs, suggesting that the lack of regulation is equal to the absence of taxes and problems with government supervisory bodies.

In fact, legal entities carrying out ICO are in the risky position in such countries. Multimillion international contributions circulate in ICO, therefore sooner or later the state will place them in certain legislative frameworks. For example, the US equated particular tokens to securities, which led to an immensetaxation of ICO. China, having faced with growing incidents of fraud, has prohibited such campaigns.

In order to avoid unforeseen situations, it is necessary to register a company for ICO in a favorable jurisdiction in advance.

3. Offer is a form of an official offering to conclude a deal. It fixes all the characteristics of the company, prescribes the terms of implementation, the required amount, further means of selling or using tokens and other details.

4. Launch of sales is the operation that can be carried out according to 2 models:

• minimum amount is collectedpursuant to the offer, and only then coins are issued, being proportionally distributed among investors;

• coins are issued in advance and are sold on the cryptocurrency exchanges.

The optimaland prompt format of the campaign is selected on the basis of the characteristic features of the future enterprise.

ICO is a profitable innovation not only for start-ups, but for investors, because the latter, if successful, will be able to multiply their investments several times by selling tokens on stock exchanges.

For detailed information, please contact Law&Trust International. Employees will clarify the specifics of conducting ICOin more detail and will assist in protecting projects from the legal standpoint to the fullest degree.