¿What is an ICO and what does it mean for new companies?

¿What is an ICO and what does it mean for new companies?

An initial currency offer is the sale of a new cryptocurrency. You may think that the model is similar to Kickstarter: a company will produce a service or, but would like to raise funds in advance. Instead of receiving T-shirts by mail, ICO buyers receive coins or tokens in exchange for their support.

So, if he bought an ICO from a young and promising company, he would trade his Bitcoin or Ethereum (both relatively established cryptocurrencies) for new currencies the company had just created. It is a risky business, but it could be extremely lucrative if you place your bet on the right company.

What is the difference between an ICO and an IPO?

Great, or the SEC will come after you! In an initial public offering, a company divides part of its shares, literally, a part of the company. At an ICO, you receive a currency that can be used to buy goods or services from the company.

Then, an IPO would own the shares of United Airlines, and an ICO would own United Airlines mileage points.

However, if the division is not cleared up enough, the US Securities and Exchange Commission will take your breath away, so many new companies choose not to call their ICO. Instead they call it a crowdsale.

Essential Token Lingo

Currency  : a coin based on cryptography that has a chain of blocks

Token  : a representation of the assets or other value that is in an existing Blockchain (often Ethereum)

Exchange of cryptocurrencies  : a market to trade with cryptocurrencies. The four largest are currently:  Poloniex  ,  Bitfinex  ,  Kraken  and  Bittrex .

Digital asset  : a general term for coins, tokens and other types of currencies online, but may also include other goods based on binaries, such as photos or documents. Digital assets are not necessarily issued in a Blockchain.

What is the difference between a token and a bitcoin or altcoin?

The simplest way to think about the difference between a chip and a coin is that the coins are the same and have their own chain of blocks (like Bitcoin itself) while the chips rest on another chain of blocks (like Golem is on Ethereum ). Ethereum, which creates intelligent contracts, can be easily used to create tokens.

What are the uses of tokens?

Tokens can be used in many ways, just like any currency can be used. Just to summarize some:

  • Steem: pay content creators for entertaining or useful content (see Steemit in the resource section)
  • Factom: create permanent records of documents or other digital assets to provide evidence during audits
  • Basic Attention Token (BAT): reach buyers with their ads paying for their attention
  • Storj: buy digital storage in the cloud (like Dropbox)

Of course, since cryptocurrencies are so flexible, the sky is the limit of how they will be used.

Why digital marketing specialists should be knowledgeable about tokens

The tokens, ICO and cryptocurrencies in general are all buzzwords at the moment. Even if your company never uses them directly, you must be smart enough to know their meanings.

However, there are some very real marketing purposes of using cryptocurrencies, too.

If you are a young company that seeks to raise money, an ICO-sorry, crowsele! – It could be fair for you. However, in general, in the first place, you will want to get to know and know yourself in the crypto community, and some of the resources in the next section will help with that!

Even accepting simply cryptocurrencies as a source of payment can be valuable. Payment companies like Stripe often offer Bitcoin support now, so you can even start accepting without changing your payment platform.

Source:  www.businessesgrow.com

About the author: Mauricio Sevilla