What does an affiliate marketer needs to know about ICO?
ICO means initial coins offering and you may have heard a lot about companies engaged in ICO. This has become a very trendy subject after the hype caused by the growth of cryptocurrency prices.
Many companies attract investors using different online channels, and here is where affiliate marketers may find some work for them. The main thing is to make sure you understand what exactly ICO is.
ICO in plain words
ICO is rather a new form of investment that is connected with issuance of cryptocurrencies. The term is an abbreviation for Initial Coin Offering.
If you are interested in investments and cryptocurrencies, then you for certain have already faced this term. In plain words, ICO is a cryptocurrency crowdfunding (collecting money for some kind of project). Often projects related to blockchain technology and cryptocurrency participate in ICO.
There is many in common between the IPO, initial public offering, and ICO. The main difference is that investors in the IPO buy securities (shares) for fiat currency, and in case of ICO the internal currency of the project – a token is used. The main task of initiators of cryptocurrency crowdfunding is to sell as much tokens as possible. Or to sell enough coins for the project development. Their actual cost remains uncertain until the release of the project.
In the future, investors will be able to use startup tokens for receiving the services or goods provided by ICO. Or even to receive dividends or to sell tokens, in case of a release of the project to the market and the further growth of tokens cost.
What is ICO: detailed analysis
ICO, representing a form of investments attraction for cryptocurrency projects, has no regulatory base. It means that any legal entity and individual can act as the initiator of initial currency offering. At the same time the project does not undergo any audits and testing. Almost all manipulations are conducted online.
The main value of ICO is the idea. For realization of some idea/project investments collecting is also carried out. The procedure usually has several stages:
- Preliminary announcement. Initiators of ICO tell public about the idea in general. At this stage it exists only on paper or even in the heads of team of a startup. Level of interest of investors in the project is tested; answers to basic questions are given. Announcements are carried out in media, social networks and also in the form of conferences. The discussion between investors and authors of the idea is conducted.
- Despite all freedom of the ICO form and lack of regulation, it has to be attached to some legal entity. Idea realization terms, the necessary sum needed for this purpose, issue of tokens and other details are disclosed. The separate website or the presentation is created. It is sometimes carried out with the preliminary closed sales of tokens.
- Marketing campaign. When almost everything is ready for ICO launch, advertising campaign is being started. Unlike the preliminary announcement, here the startup can already give more information about the product/service, disclose conditions of investments, the purposes, technical details. Various channels are used: media, social networks, presentations, thematic portals. And here is where affiliate marketers come on the scene.
- Sale start. Full start of sale of tokens is called tokensale. Initially the startup suggests investors to get a token on the platform (website). ICO startup token enters the market and is considered as a peculiar proof of solvency of the project. Though not always it means that it will be successful.
All this reminds standard crowdfunding or venture investment. You make investments in a startup at its inception. You are aware about the idea and investment conditions. In case of success of the project you receive the dividends. However, ICO is also regulated by nobody in any way and is surely connected with technology of blockchain or cryptocurrency.
The majority of projects use smart contracts of the Ethereum platform. Investment is made in ETH, and rarely in other cryptocurrencies. The potential income from ICO can be 100-1000-10000 multiple in comparison with initial investments.
Popularity of ICO is connected with the general popularity of cryptocurrencies and general availability of this type of crowdfunding. It is enough to have funds (owned or attracted) and the idea to initiate ICO.