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How does the Bitcoin news trader scam work?
An ICO is a method of Bitcoin news trader scam financing. The so-called Initial Coin Offerings are in parts comparable to an initial issue of securities on a stock exchange. An ICO is an opportunity to acquire Bitcoin news trader scam tokens for projects in the blockchain ecosystem via crowdfunding. Supporters or investors acquire the tokens of the project and speculate that later a higher value of these tokens will result, similar to a stock on the stock exchange with the prospect of price gains.
Typically, ICOs are used to finance start-ups and new businesses. The startup “generates” the digital tokens and then sells them. This means that the money goes directly to the company’s team. It is to be used to build up the company.
An important difference to IPOs (Initial Public Offering) on the stock exchange is that ICOs generally do not represent ownership of the company via the token. It therefore does not entitle the holder to a dividend, nor does it automatically carry voting rights.
There are two basic purposes of tokens:
Utility Token for Bitcoin formula scam
The token does not represent any rights to the Bitcoin formula scam project or company. Instead, it should be used by the users as a means of payment after completion of the project. If the project is successful, the demand for the tokens increases and it experiences price gains on Bitcoin formula scam trading platforms. The token thus has an inherent value.
Revenue Share Token
This type of token is more comparable to shares. It entitles the owner to receive dividends. It does not always fulfil a functional purpose. The token may not even be needed to operate the platform itself, but merely serves as an investment vehicle to distribute the profits.
Depending on how the token is technically implemented, it may be that the distribution is automated via Smart-Contracts. It is conceivable, for example, that a project generates profits in the form of ethereum. Investors who hold their own Ethereum-based token from the ICO will be credited a corresponding portion of the profit to their Ethereum wallet.
What are ICOs used for?
ICOs were initially used to bring new crypto currencies onto the market and to ensure initial financing through the ICO. The projects were usually blockchain-based and the tokens were real utility tokens. Increasingly, financing via ICOs is also becoming interesting for existing companies, for example project-based. For this purpose, tokens are issued as revenue shares, which serve to distribute profits.
ICOs are particularly interesting for companies because the highly complicated process of an IPO is enormously simplified and can be implemented with moderate effort, e.g. on an ethereal basis. In addition, the investment opportunities will be accessible to a broader target group and tokens can be traded in smaller quantities more flexibly than shares on the stock exchange. The ownership of the tokens is represented on a technical level by a block chain, so that these peer-to-peers can be traded on any number of marketplaces – for stock trading, on the other hand, a central authority is required to manage the possessions.
Nevertheless, the unclear regulatory situation of ICOs poses particular challenges for companies. In many countries it is unclear whether ICOs are treated like conventional crowdfunding methods, in some countries ICOs have already been banned or severely restricted.