Published in ·
--
Every startup or entrepreneur will have an excellent and unique business idea, but the funds related to executing them might be a barrier. So the capital required for proceeding with the project plays a vital role. This is where CRYPTO CROWDFUNDING enters. The crowdfunding concept has been in the market since the late 90's. Some might be aware of what crowdfunding is and why it has a separate audience worldwide. If not, then I will give a quick overview which will help you to understand.
Crowdfunding is a fundraising process where a crowd funds a project idea or business rather than one or two giant investors.
In other words, we can say that a startup or an organization funds a business with small donations from many people. To conduct a successful crowdfunding campaign, you need to attract the attention of many potential investors and convince them that your project idea will be worthy of their investment. All the crowdfunding campaigns will be mostly conducted through internet platforms. We can classify crowdfunding into two distinct types such as traditional crowdfunding and crypto crowdfunding. But among these two, the crypto crowdfunding method is preferred by most young startups and entrepreneurs worldwide. It is because of the prominence and various advantages involved in crypto crowdfunding.
Crypto crowdfunding is an exemplary fundraising strategy that is fully operated on blockchain technology. With the help of a blockchain-powered crowdfunding platform, one can raise enough capital efficiently in a secure way. The security embedded here is the most attractive section which has captured the attention of many people who want to raise funds for their project. In crypto-based crowdfunding, there are three popular types such as ICO Crowdfunding, IEO, and STO. When comparing all these three fundraising methods, ICO Crowdfunding is still a conqueror in the blockchain industry. The preference and interest of startups towards this ICO Crowdfunding method are high when compared to other methods.
In this blog, let us discuss what ICO is, why ICO crowdfunding is more efficient, and the benefits of ICO.
Initial Coin Offering(ICO) is the popular and best crypto crowdfunding method since 2017. Even though the first ICO project came into the market in 2014, ICO Crowdfunding got the attention of many crypto people only in 2017. ICO is the crowd sale platform where the newly launched crypto tokens will be sold to a huge amount of investors globally without any hassle. To raise a fund effectively, the startup needs to have a perfect and proper white paper. Only after analyzing the white paper, investors will show their interest in the token or a coin. As per the current market, there are several ICO projects introduced with different use cases but only a few reached a great height and gained popularity among traders and investors.
ICO Crowdfundings are far similar to Initial Public Offerings but the major difference is the asset and currency they use for raising the capital. In an IPO, investors will buy new stocks using their fiat currencies and hold them until it comes for public sale. On the flip side, in the ICO crowdfunding, investors will buy new crypto’s using any of the existing crypto coins. The investor needs to hold the crypto asset in the wallet and they can sell them when it is listed in any crypto exchange. Here the crypto asset is related to the share of a company in the IPO. So far plenty of investors yielded a hefty amount of profits by investing in the right ICO projects.
But some people are claiming that an IPO is the best option for crowdfunding! But my answer will be a big “No” because when comparing Initial Coin Offering with IPO, ICO Crowdfunding has the huge potential and popularity among budding startups.
Now, let us see…
Most startups might be aware of what an IPO is and how it is related to fundraising.
But why ICO Crowdfunding is better than IPO is a million-dollar question?
Initial Public Offering is conducted by the big organizations and companies who are willing to raise the funds for their future projects. Entering an IPO will increase the trust of the service or product they offer for the users. On the flip side, investors faced many drawbacks in this method. One of the major drawbacks of investing in the initial public offering is that there is no guarantee of receiving the shares. If the IPO shares are subscription-based, then anyone can participate and apply for them. The risk involved in an IPO is high, because when an investor purchases the pre-IPO shares, then he/she might be at risk of receiving less capital than invested.
When an organization or company has decided to go public, then there will be only small information in the public domain. IPO’s are deemed as risk-free investments in many countries but they are subject to high market volatility. Besides this, IPOs also fail to deliver the promises they kept in pre-launch and they are frequently over-hyped. Considering these drawbacks and issues, without a doubt we can say that ICO Crowdfunding is far better than IPO. When compared to an IPO and other crypto fundraising methods, ICOs have plenty of benefits for both token issuers and investors. That’s why, Launching an ICO is still high potential and popular among startups and entrepreneurs.
Now, let us see…
ICO Crowdfunding has many advantages and offers several opportunities for startups to grow or start a crypto business effectively. Apart from raising capital, there are various benefits to ICO . Below listed are a few noteworthy advantages of an ICO Crowdfunding.
Anyone can Participate
Crypto token sales that happen in the ICO are completely from the equity sales in an IPO. An IPO comes with many regulations but the token launch will be equated to the sale of digital keys. The investor’s participation in the Initial public offering is limited. But in ICO, crypto tokens or coins can be sold to anyone in an anonymous way. In IPO, only 3% of the US adult population meets the $1 million net worth. This means that only 3% qualify for investing in an IPO. Whereas in ICO, 100% of the adult population can purchase tokens.
Crypto Tokens can be sold Globally
ICO offers a great opportunity for global investors to invest in newly launched crypto coins and tokens. If an IPO account receives thousands of wire transfers in a minute, then the bank account will freeze the assets. But in ICO, cryptocurrency will be paid for buying the new crypto tokens and are always open for operation. ICO is globally accessible for all investors so everyone across the world can easily participate in token sales. This is one of the major benefits of ICO when comparing traditional crowdfunding models.
Token Economy
The tokens that are sold in the ICO have a value and that value will be the same in the crypto marketplace. In an IPO, it might take more days to complete the pre-sale and acquire the funds for the project. Whereas in the ICO, tokens will be sold to the crypto investors within a few minutes. The funds raised using ICO will be far higher when compared to an IPO. Besides this, investors can also gain profitable returns in a short time. Holders can participate in new ICOs by connecting their crypto wallet which should have sufficient balance that is mentioned on the ICO website.
Less barrier to Entry
ICOs can be launched anywhere as per the startup business idea. But in an IPO, a startup can not conduct equity sales at any place which is a major drawback. In simple words, a startup can quickly raise funds through the ICO platforms wherever they are located and from whoever they want. Therefore, it destroys the barriers to entry.
Instant Buy-in
In ICO, there will be no third parties between crypto token buyers and sellers. Once the crypto tokens are developed and deployed, they can be quickly sold to various crypto investors. The biggest advantages here are the fast and efficient process for both the owner of the token and those investing in them.
Decentralization
As we know that cryptocurrencies are operated on the blockchain which is completely decentralized. Due to the decentralization, no one can monitor the transactions that are happening on the ICO website.
Considering the above-mentioned benefits, we can say that ICO crowdfunding is the finest model for startups. In case if you have any unique business idea based on crypto or blockchain, then you can create your own crypto token and raise funds through the ICO platform. For launching an ICO and raising funds, you need to have professional assistance from the leading ICO development company in the blockchain space. But you might not know how to find the best ICO development firm for your ICO business. So, let us see…
When it comes to ICO development, many startups and entrepreneurs are emerging towards the finest ICO development firm to get the best-in-class output. To make your ICO website more reliable and function-rich in the crypto market, you need to hire a professional and skilled team of blockchain developers. Recruiting well-skilled developers is a kind of a tedious task. Don’t worry! Here I shared some of the ideal tips that you need to consider for finding the right ICO Development Company for initialing an ICO platform.
- Examine their portfolio & Company reputation
- Check whether they use advanced technologies or not
- Reviews and Feedbacks of clients
- Experience, Quality and Customer service
- Verify the team of blockchain developers.
- Check whether they are capable of completing blockchain projects within the desired time.
I hope these above-mentioned factors will help you to make the right decision in selecting the genuine ICO development company in the crypto sector.
Wrapping up
If you are willing to raise capital for your unique project, then going with ICO crowdfunding will be the ultimate solution for your crypto business. Even though there are some downsides to ICO, there are also many advantages. With a hefty amount of returns from various crypto investors, ICO crowdfunding is recognized as the perfect fundraising method. As the market is filled with many ICO service providers, so do an in-depth market analysis and approach the top-notch ICO development company in the blockchain sector.
