Top 3 Things You Should ABSOLUTELY Know About Token Sales
You’ve heard of IPO (Initial Public Offerings) for selling shares to investors. What about ICOs (Initial Coin Offerings)? Here are three basic things you should definitely know by now!
Let’s make it clear.
IPOs and ICOs sound similar but they are quite different.
So, we’ll be covering three main aspects of ICOs: What, Why, and How.
Since you’re already into this, a small bonus awaits you at the end. Keep reading! :D
What is Token Sale?
First, we’ll cover the basics: the introduction, its types, and the process.
Let’s talk intro.
The token sale, or ICOs, is the sale of a form of the digital asset (tokens), which are based on blockchains.
Basically, ICOs are for crypto as IPOs are for shares. The major difference lies in what the ICO is used for. ICO not only raises funds for projects but offers special utilities which can be used in the very same projects. It is a sale for a limited period to the public for a set of crypto tokens with a predefined number.
Fiat or digital currencies are used to buy tokens in the first place. Newly formed tokens often resemble stocks of a company.
But is the coin market is as big as the stock market?
Arguably, yes.
A PWC report shows that in 2017 itself, token sales went from just three in January to a whopping 188 sales which accumulated USD 2,901 million. I’d say it’s big.
Token Sales and Its Types
Token sales depend upon two major elements: Number and Price.
So, a Static or Dynamic Sale depends upon it.
Pre-defined Price + Limited Number = Static Sale
Here, the total token supply is going to be fixed alongside the price of it.
Dynamic Price + Limited Number = Dynamic Sale
Here, when the company takes into account the fund’s amount, it can determine the price per token.
Pre-defined Price + Dynamic Number = Dynamic Sale
If the price is already fixed, the number of funds received will determine the number of tokens for sale.
The Process
If a company wants to raise funds via ICOs, it must first consider the type of token sale.
Then comes the four stages of token sale:
- Pre-announcement: Includes white papers to determine the features of the token, a road map for the team, and the terms and conditions for sale
- ICO Marketing: Includes pre-sales before the main crowd, talking to prospective investors on various social media, and planning ranging from the length of sale to its timings
- ICO Launch: Includes announcements, registrations, following the target to be raised, actual transactions among others
- End of Sale
Who can make tokens?
Simply, anybody.
Token sales are one of the most unregulated forums where anybody with the knowledge of its creation process may create a token and sell it.
While this may be great for companies in need of the booster investment, it’s even more inviting to scammers.
Remember DJ Khalid? Well, he got involved with Centra Tech, a once popularized ICO of 2017. Unfortunately, the court ruled Centra Tech to be a scam where the promoters had to settle while the founders pleaded guilty. Yikes!
How to get started?
For buying, simple enough, you have to research. Starting with the blockchain it is based on and its developers. If it seems sketchy and unverifiable in any way, it’s best to stay away.
While for the creators, well, we’ll have to recommend you to the pros. Check out this video:
https://www.youtube.com/watch?v=1cn-HnG_yns
The Bonus: About the New Token Sale in Town
Something’s cooking up at Zebec and it smells like a likely token sale! Zebec’s already launching its Zebec Pay, a low-fee, payroll solution that enables employees to be paid by the second. Not long ago, they just concluded their first worldwide hackathon. But that’s not where they plan to stop. Their next step seems to introduce their token which has been creating a buzz in the market.
Stay tuned to find out!
