🔤 A Glossary of 30+ ICO Concepts: Part 2

Have you ever stumbled upon a new concept, wondering what does it mean? Priority Token is breaking down for you some of the most common and useful terms in the ICO industry. Read the first part in here.
Here’s the second part of our Glossary. Enjoy!
16. Hard cap — a total issuance of a coin that could be created. This amount is usually specified before starting an ICO. The token issuance can’t exceed a hard cap to prevent overinvestment, leading to decrease of the token value. Having a hard cap helps to ensure that a project raises enough funds to deliver the product or service while eliminating the risk of ruining the coin value in the long run.
17. ICO (Initial Coin Offering) — is a crowdfunding tool that runs on the blockchain. The key idea of an ICO is to help fund new projects by selling ICO tokens to investors. To engage with investors, the project founders create a whitepaper describing their product or service and providing a detailed business model, lay out a timeline for the project development and set a hard and soft cap for the future investments. During the ICO crowdsale stage, investors acquire tokens with cryptocurrencies like Bitcoin, Ethereum, etc.
18. KYC (Know Your Customer) — a set of requirements for the ICO projects that ensures that their activities conform to laws and regulations concerning anti-money laundering, counter-terrorism financing, and other regulations. In the course of the KYC procedure, a token buyer has to provide some personal data.
19. Market capitalization (market cap) — an estimated market value of a company, often referring to either price multiplied by the circulating supply (i.e. free float market cap) or price multiplied by the total supply (i.e. fully diluted market cap).
20. Maximum Contribution — a maximum amount of currency that a single investor is allowed to contribute. Smaller ICOs usually don’t have this feature, while more popular ICOs often impose limits of maximal participation to ensure a larger spread of investors and minimize the risk large investors being able to influence the token value by dumping the coins or taking part in other schemes.
21. MVP (Minimum Viable Product) — a product or service in its initial-release form, that implies a basic set of options. If an ICO team can boast an MVP released prior to the crowdsale, this can be seen as a positive sign that proves the project to be credible and feasible.
22. Ponzi Scheme — a fraudulent scheme that implies generating a return for older investors by using money from newer investors.
23. Private sale — an optional stage of ICO, when the tokens are offered to a limited audience consisting of venture funds, business angels, and other institutional investors.
24. Roadmap — a timeline for an ICO that provides a clear idea of how the project will progress, and what will be the milestones. A roadmap is essential for an ICO, and the milestones are functional and objective instruments for evaluating the progress of the project.
25. SAFT (Simple Agreement for Future Tokens) — is a contractual algorithm for selling tokens to accredited investors.
26. Smart contracts — self-executed mechanisms for distributing or transferring digital assets, based on a specific model or triggering events. The smart contracts run as programmed without any downtime, interference, censorship, or fraud.
27. Soft cap — an ICO fundraising goal. As opposed to a hard cap, a soft cap is typically lower, more like how much a project is aiming to raise in order to deliver the product or service they are developing. If a project doesn’t reach a soft cap, funds are returned to the contributors.
28. Token — an entity with a value specified by the eminent. Tokens are basically a representation of a particular asset or utility, that is usually built on top of another blockchain (Ethereum, Waves, etc.) To create tokens, you have to follow a standard template on the blockchain. Tokens are issued and distributed through an ICO.
29. Total supply — a total number of tokens in existence, including those circulating in the market and those that are locked by the issuers.
30. Whitelist — a list of registered participants that are granted with an exclusive access to an ICO pre-sale.
31. Whitepaper — an informational document, issued by an ICO team to promote its solution, product, or service. This document generally contains a lot of technical information, a business model, and an explanation of how this particular product will solve some of the existing problems, and why there will be a demand for it. Whitepapers are used to persuade potential investors to learn more about the product and purchase the project’s tokens.
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