Advantages and Disadvantages Of Initial Coin Offerings (ICO)
"Everything in this world is a combo of Goods and Evils . "
Technology always moves upwards by holding advantages over one hand and disadvantages on the other . Not only technology , everything in this world is binded by both goods and evils in them. It is always with people side , that whether to hold useful or harmful hand to walk with technology.
ICO - A Short Intro :
ICO - A Crowdfunding model based on cryptocurrencies that helps startups and entrepreneurs to raise capital fund for their business growth. The entire process will be on road by implementing smart contracts, Tokens, and with the proper white paper launch.
Pros of ICO :
ICO has more pros over IPO . As ICO uses Token for its crowdsale , this made users to move towards tokens from cryptocoins. Let us have a look at the benefits of ICO .
1. Token Offering Concept :
ICO concept paved the way for the introduction of Tokens. In ICO , the issuers of ICO provides tokens or sells their tokens to investors for their fund raising.
This tokens are wrapped up the details about this ICO process. which will be explore the things about, what is the purpose of ICO ? , duration of ICO and other related things in encrypted formats . This provides a better knowledge to investors about ICO concerned.
The utility token helps investors to claim for services/ products after the launch of ICO.
2. Duration and Investors Coverage :
ICO is not so easy process as one thinks. It requires lot more time from planning , white paper writing , token creation , fund collection , until the success of ICO it is a long process. But as compared to IPO or Initial Public Offerings , ICO requires short duration.
In IPO , there is no possibility of finding all interested investors , whereas in ICO moreover we can able to cover all interested investors so as to make ICO successful .
3. Decentralization - Blockchain :
In ICO , the status of ICO at each time is written on the Blockchain , a distributed ledger which allows all investors to know about ICO process day by day . This concept of decentralization prevents the fraudulence activity by issuers over investors through ICO .
Cons of ICO :
1. Absence of Security Token :
As all ICO provides only utility tokens for investors , ICO is considered as less security in recent days. This is because of the invention of security tokens in the crypto world . Security token contains all details about the fund raising process and allows investors to claim for profit/share after the launch of ICO process. This new form of ICO which supports security tokens is known as Security Token Offerings or STO .
2. Not a guaranteed Process :
ICO is always considered as a un regulated process from both issuer as well as investors end. This is because , investors are not sure of profits for their invested cryptocurrency and issuer is also not sure about the success of his ICO . There are more ICOs that results in unsuccessful.
3. Openness nature towards Investors:
ICO allows everyone to take part as an investors . This creates a situation for people who doesn't know about all its consequence to invests in ICO , which creates difficulty when there comes unsuccessful or fraudulence results of ICO.
STO allows only business experts to take part as issuers or investors. This reduces such difficult situations that occurs in ICO.
To know more about the concept of STO , just have a look at this blog : Security Token Offering (STO)- The Resurrection Of ICO