How can a person purchase ICOs? And why are ICOs important for new start ups?
ICOs have the generic roots for crowdfunding around cryptocurrency and also a source of capital. A person has to use any Cryptocurrency to buy an ICO and this is why the Cryptocurrency Payment System is going up every day. ICOs are built on the technologies created by Ethereum. ICOs are created as sellable tokens that can be purchased by the users using existing cryptocurrencies like Bitcoin, Ether, etc.The new ICOs created will increase the value of the coin(in the form of a token). there are two types of ICO tokens, namely ASSET-BACKED CRYPTOCURRENCY and UTILITY TOKEN.
ICO is An Initial Coin Offering is a fundraising source from crowd of cryptocurrency investors and markets. When a new currency is launched, the company needs initial funds to make it work and this is where ICO evolved.
Initial Coin Offerings (ICOs) are what Initial Public Offerings (IPOs) do for issuing of shares of public companies listed in Stock Exchanges. However ICOs are ways to crowdfund projects and at the same distribute crypto currencies, coins or utility tokens to their communities. While shares represent ownership of companies and shareholders retain the highest risks, cryptocurrencies/coins/utility tokens are medium of exchange to reward contributions in the ecosystem and token economies of these crypto projects. ICOs have not standardized regulations yet: depending on countries and jurisdictions there are different laws and rules to follow. For startups it is much easier in terms of legal compliance to fund themselves with ICOs then traditional VCs seed funding or IPOs later in their development stage.
Recently blockchain startups are using alternative ways to fund their ventures and projects: IEO (Initial Exchange Offering), STO (Security Token Offering) and IBO (Initial Bounty Offering/IAO (Initial Airdrop Offering).