What is an ICO?
What is an ICO? ICO is short for Initial coin offering and can be thought of as the cryptocurrency equivalent of an Initial Public Offering (IPO).
With the rise of the cryptocurrencies, an ICO is a new mechanism to raise funds for amazing business developments and projects. To a person that is already part of the “crypto world” it makes total sense. With this explanation I hope to reach the granny who is knitting a sweater on her rocking chair to the non millennial who has heard these terms and is dying to get on the wave.
Basically, Dapps (Decentralized Apps , a blockchain service or utility, built on the Ethereum blockchain or any other programmable blockchain) use an ICO to raise money and value the tokens (or coins) they will use in their service/apps. Instead of shares, you receive tokens that are built on the blockchain where stakeholders are also fund contributors. Those tokens are then listed on private exchanges where their values are determined based on factors such as supply and demand, what is happening in the project and so forth. Simply put, an ICO is a process of raising funds for startup companies. Simple right?
Startup companies create a token specifically related to their company on the blockchain. They then usually have a pre-sale where tokens are often sold at a discount. They then have the main sale, called the public sale, where tokens are sold at the full price. To protect anyone buying in the public sale, pre-sale tokens are often locked up for a specific period. You can think of the tokens as owning a share in the company, except the token gives you no ownership rights nor do you really share in the ‘profits’ of the company. Instead, you hope that your token value will grow as the demand for it increases. The one advantage of an ICO over an IPO is that you also will have the option to pay in cryptocurrency, often Bitcoin and Ethereum.
Benchmark Token is unique in that not only are you able to hold or trade your BMK tokens, you can also swap these tokens for security tokens in one or more of their amazing projects and actually share in the profits of these ventures. It is the perfect combination of cryptocurrency and real-world entrepreneurship.
Many ICO’s these days are built on the Ethereum blockchain and use ERC 20 tokens. What does that mean?
An ERC20 token is a term used for smart contracts on the Ethereum blockchain. In order to receive your tokens after you have purchased them you need an ERC20 wallet. You cannot participate in token sales directly from cryptocurrency exchanges and some wallets (especially those where you do not have access to your private key).
There are a few compatible wallets known to accept ERC 20 tokens.
My EtherWallet (one of the most recommended)
MetaMask
Mist
Parity
MyEtherwallet + Ledger
MyEtherWaller + Trezor
Stay tuned for our next post — A step by step on how to setup your MyEtherWallet so you can safely store your tokens.
This blog was brought to you by Benchmark. The Venture token, that opens doors and creates opportunities for all, a game changer in business. Visit us at www.benchmarktoken.io for more information about our awesome project.
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