An initial coin offering is a way through which companies looking to raise funds create a new coin and invites investors to invest in the cryptocurrency. An investor is usually a person who invests his capital to earn some financial return or an advantage in the future. It can be thus considered as a fundraising tool for new startups by creating a new digital token such as bitcoin, ether, etc. via different platforms while the investment can only be done in in the form of crypto coins and tokens which are supported by the fundraiser.
So if you want to issue your ICO, you can take the help of ICO development services providing companies that will help you to prepare your start-up model and numerous strategies to meet the goals of your project. But before going for an ICO, it is important to have complete detail about its basic components.
Creation of a Token Wallet
If you want to create your own token wallet then it can be done easily in order to raise the funds for the launch of an ICO. Generally, it is very easy to develop an ERC 20 token. An ERC 20 is a standardized software interface for interaction between two parts of a software and is compatible with most of the network. Also you don’t need to create a new wallet as MyEtherWallet is available for exchange and it brings uniformity to the network and reduces the complexity while increasing the token liquidity.
Smart contract and token wallets are its two essential components that act as a backbone for an ICO. Smart contracts not only helps in issuing new tokens but also helps in their selling, distribution, including inflation mechanics, equity amount, future earnings. Ethereum being the popular platform for most of the ICOs while other platforms that are also used include Stellar, Waves, Neo, etc.
Importance of smart contract
A smart contract is a set of protocols specified in digital form which contains every information about the product and is stored inside a blockchain. Smart contracts thus allow you to build a system without any help from the third party. It is a way through which you can exchange money, store it or anything of some value without hiring any middleman and that too with great safety and security and it can be programmed until the received funds reach a certain goad is reached. Due to the capability of being faster, safer, and cheaper and many more, smart contract plays a crucial role in raising funds. Some of the importance is:
Safety and security: Smart contracts help in facilitating transactions related to your ICO. It ensures investors that their money is safe and are free from the issue of being stolen, theft or misused. It also discourages the involvement of any middleman. In case the project meets the criteria of funding then the funds are transferred to the creator of the project and if it fails to meet the goal then the money is automatically returned to the supporters or the investors.
Clarity and accessibility: a smart contract is a part of an ICO that ensures investors about the reliability of an ICO. For this, you can add information within the smart contract and other details including powers of the owner, features of the token, etc.
Token integrity: With the help of a token wallet, investors remain assured of the expected value of the tokens. As funds rose through sale and purchase always locked up in the escrow system, it assures the investors about their rights and investments.
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