First Coin Ethereum Tokens (ICO) is a crowdfunding method utilized by new cryptocurrency businesses to raise capitals. Back in ICO, some proportions of the newly issued cryptocurrencies are sold to folks who are interested in supporting the project. They are sold to swap for other based cryptocurrencies like Bitcoin, Fiat and Ether.

It is similar to the principle of folks making a profit when the share they bought at the stock market rises in value. ICO is different than buying shares at a stock exchange because you don’t receive a share of the possession right when you invest in the new tokens.

Short Background on ICOs

In the beginning point, ICO was conducted by companies like Mastercoin, Ethereum and Karmacoin. Ethereum conducted among the biggest ICO in 2014 by raising a total of $18 millions in the first phase of 2014. They break the record by raising 3,700 Bitcoins which is equal to $2.3 million dollars over the first 12 hours of this campaign. Kik ran the initial mainstream ICO in September 2017 but the project was interrupted by a phishing scam via the flow of a fictitious URL in the social websites.

Today, ICO sales have become increasingly more popular with approximately 50 token sales being conducted each month. Beginning from 2017, ICO has been growing at a fast pace with at least $2 billion worth of token sales successfully ran. This demonstrates it isn’t likely to become a temporary method used by fresh cryptocurrency business to raise funds but it’s here to stay for long term.

Nowadays, ICO token sale is so popular at least a couple ICO starts every day. It’s been predicted that more than $4 billion value of token sales will be conducted this past year. They figure out how to increase a total amount of $2.3 million at the market presale.

How Can ICOs Fundraising Work?

A cryptocurrency company which wishes to increase capitals via ICO must provide a couple of details including job description, project purpose, amount have to be increased, percentage of tokens the corporation will maintain, types of virtual currencies accepted, and the period of this ICO campaign. Backers who are interested will email the vendor and ask for more information of the job before performing a trade. If they raise the amount for the campaign, they will execute the scheme to complete the undertaking. Otherwise, they’ll return the cash back to the backers.

How Scammers Use ICO to Take Out Fraud?

ICO can be conducted to help raise capital for various kinds of companies and charity organization. It has also been used as a tool by scammers to conduct frauds. Scammers would use means to increase the ICO value temporarily and abandon the project afterwards to earn a fast profit. Scams happen because of the lack of regulation by the authorities. The same as any investment, there’s a risk when coming to put money into the initial coin supplying.