Unlike an IPO ( Initial Public Offering), investing In an ICO doesn’t necessarily mean that you have an ownership stake of the company you are giving money to.
Essentially, it is a fundraising mechanism, in which new projects sell their tokens in exchange for crypto currencies and fiat currency.
Most ICO’s operate by having investors send funds to a smart contract that stores the funds and then will distribute the tokens at a later point. The tokens then become functional units of currency, once the ICO’s funding goal has been realised.
The two main types of crypto currencies are utility tokens and asset-backed tokens.
Utility tokens enable the holder to exchange the token for a good or service in the future and asset-backed tokens, have an underlying asset attributed to them.
Crypto currencies can easily be transferred across national and jurisdictional boundaries and different countries, have different approached to their regulation.
If you are interested in investing in an ICO, look at resources on the latest and upcoming ICO’s.
Popular ICO’s with limited numbers of coins to offer are generally listed on a whitelist, which means that you will have to register in advance to participate.
If after doing your research, you are comfortable with participating in an ICO, then you should open a fiat-accepting exchange account, to convert your domestic currency into a popular crypto-currency, like Bitcoin or Ether.
It is essential that you have your own private wallet so that the ICO tokens are transferred to your own private wallet that you own.
Your exchange account does not count as your own wallet and you will not get the ICO tokens if you send currency from the exchange.
Most ICO’s will provide a step by step guide to participating in their ICO’s, so be sure to follow their instructions and if you have any questions, direct them to the ICO’s development team.
Try and hold onto the coins until your price target is hit or until it reaches an exchange that lists ICO’s.
If you miss out on an ICO, you can buy later at an exchange that lists them.
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