The advent of the blockchain and cryptocurrency has led to an explosion of new projects built on this technology. In order to fuel these projects many startups are running crowdsales in which they offer participants tokens in exchange for Bitcoin and Ethereum. These offerings have become popular and may be the largest and most exciting thing to happen to funding technology since the advent of those other technologies we know. It is likely that we are witnessing the birth of a new paradigm in fundraising. This piece should serve as a quick guide to what is happening today in the world of blockchain technology and crowdfunding.
1. Distributed Autonomous Organization :
A Distributed Autonomous Organization is a type of decentralized business structure that is run by smart contracts lacking any form of central control. This structure is primarily used for incentivizing users to participate in the ecosystem by rewarding them for their efforts. It is also often used as a business structure for token launches. It has achieved this status because it is a fully autonomous entity that can raise funds and distribute tokens without any need for human intermediaries.
2. Token Sales :
A token sale refers to a crowd sale where tokens are offered to investors in exchange for Bitcoin, Ethereum, poocoin and other specific tokens or cryptocurrencies. The tokens are usually sold in exchange for money and the investment is usually used to fuel the project. This structure has been popularized by Ethereum and has become an important component of many successful projects. In these crowdsales there are often rounds in which additional funding may be provided to finish the project raising large amounts of money.
3. Token Crowdsale :
A token crowd sale is a specific type of crowdsale in which a holder of previous tokens may purchase new tokens for their own token at a discounted price. This structure often requires the holder to have existing tokens in order to make the purchase. In this way the existing token holders get to benefit from the project and also increase the demand for their tokens. It also incentivizes the existing holders to hold on to their tokens. The structure is similar to an ICO in that the tokens are sold to investors who will benefit from the project directly.
4. Initial Coin Offering :
An ICO is a new form of crowdfunding that has taken the world by storm. The concept is simple for an investor buys tokens from a startup which gives him or her access to future services and products that are created by that company. Unlike other kinds of crowdfunding, this structure only requires people to use bitcoin and $loomi or ether to purchase the tokens instead of being required to send fiat currency. It is an excellent way of raising funds for a project while giving early investors access to future services. It is also a great way for startups to eliminate the risk of working with angel investors who might hold a large percentage of early investor equity.
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