The cryptocurrency market is on a high and new digital coins are being launched almost every other week. Are you too contemplating to try your hands in cryptocurrency? Well, that’s great as experts have predicted digital coins as the most potential investment mediums of the future. But to invest in a cryptocurrency token or coin, you have to buy it in the first place. So, how are new cryptocurrencies launched and sold to new investors?
The concept of ICO
When a company decides to roll out a new cryptocurrency to pull in investors, the company starts with an ICO or Initial Coin Offering. As part of the ICO, the company will extend a sizeable sum of its issued digital coins or tokens for sale. The main goal here is to raise investments from interested investors and the collected sum will be utilized to fulfill the goal of the token. Various tokens are launched with various goals in mind. Some are aimed to raise funds for innovators while some are fighting for a greener world.
The ICO in the crypto world is somewhat similar to crowdfunding campaigns that startups launch to raise their initial capital. Every ICO has two fundraising goals- soft cap and hard cap. The first one is the lower or basic limit of fundraising while the other one refers to maximum upper limit. The company launching the ICO should publish a detailed whitepaper containing data about all the major aspects of the token and the ICO. These include the goals of the ICO, utility of the coin, the dates and details of the sale and so on.
Airdrop, pre-sale and public sale
A lot of crypto platforms launch the coins with an Airdrop. It’s a concept where coins are offered to investors for free, especially in the initial phase of the launch. After Airdrop, the crypto company will start a pre-sale phase where you will have to buy the coin either with a cryptocurrency or with fiat. Once the pre-sale gets over, the actual public crowdsale will start. Both pre-sale and public sale phases often offer bonuses for early investors.