Crypto Academy Week 9 - Homework Post for [@imagen] -ICO: (Initial Coin Offering) by @faizanwrites07

Hello (Hola) everyone!
I hope you all are well and enjoying learning and working on @steemit.

After attending the lecture of professor @imagen about ICO (Initial Coin Offering).

As a student of Chartered Accountancy, I have learned about IPO (Initial Public Offerings), but this lecture helps me learn about ICO which was new to me. And I have learned so much from this lecture.

I will be writing on the Assignment of ICO (Initial Coin Offering). So let's start it.

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Question-1:
Explain in your own words what an ICO is?

Answer:
ICO stands for "Initial Coin Offering), which is a similar term to IPO (Initial Public Offering) but there is a slight difference in the work method and purpose of both. IPO means the initial offering of the sale of shares to the general public of a company in the traditional market. While ICO (Initial Coin Offering) contributes to raising funds for a project that arises in the blockchain. In simple terms in ICO, the coins are offered against funds to potential investors, to collect traditional money against tokens or coins. which can be used in the project by the investors.

ICO's method of financing has gained an increase in recent years, which is thought to be a very good option of fundraising for a project.

To raise funds against ICO's, there should be an underline project for that. It can also be used in the development of a specific cryptocurrency.

But as of two sides of a coin, ICO can give you a high percentage of return in the long-term, and also there are quite bad experiences of frauds by means of ICO, which can put investors in a very huge loss. A study carried out by the ICO advisory firm, Statis Group, showed that 80% of ICOs were scams in 2017.

There must be a whitepaper for the project, which may be nothing more than an explanation in detail of the project under development.

The positive aspect is, due to the option of ICO, people have started many projects which might otherwise have looked like a dream to get started.

Question-2:
Mention the differences between ICO and IEO.

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Answer:

Difference between ICO and IEO:

IEO (Initial Exchange Offering) is a different term than ICO. In ICO the funds are raised by the project developers, and no third parties are involved in this process. There are no regulations by some other intermediary, other than only the support of the whitepaper or any other document (which describes the features of the project) and the marketing strategy to attract the potential investors.

But in IEO the difference is, it is the ICO regulated by an exchange, who is in charge of managing the funds received from investors for the project.

That is why there are certain rules placed by that same exchange for the financing of the project. The developers shall pay a commission to enable their tokens to be sold through the exchange and the investor must register with the exchange to be verified as the user of the exchange before the investment.

ICOs provide greater security to their investors for the deposited funds but the risk margin is also very high while investing in the ICOs as there might be a high risk of fraud or scam in the name of the project.

Question-3
What are the advantages and disadvantages of ICOs?

Answer:
Advantages of ICOs:

1-ICO has enabled us to start work on any dream project if it has the worth to get started after the attention of the investors, as almost 50 percent of the projects do not work out because of low funds.

2- Every person can create an ICO on any type of forum, but there must be a good explanation and strategy of the project to attract investors to invest.

3-ICOs eliminates any type of intermediary as it is linked with the blockchain technology, which makes the process of ICOs easy in respect of requirements.

4-There is no restriction on the amount of investment by any investor in ICOs.

Disadvantages of ICOs:

1-In ICOs, there are more chances of fraud and scammer collecting money in the name of investments.

2-Also, the investors are provided with only the whitepaper and any other details of the project, and no real structure of the project. which arises a security risk.

3-Investors might be at loss anytime if the market value of the token does not worth according to the investment, as the demand of the token decides its price.

Question-4
List at least 1 ICO that is starting, is in development or has ended. Explain the project of the development team and add information of interest. (Example: IOTA, Spectercoin, Ark)

Answer:

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ICO of IOTA
IOTA is the first open-source distributed ledger that is being built to power the future of the Internet of Things with microtransactions and data integrity for machines. The initial coin offering of IOTA ended on 19th December 2015 collecting a total amount of $590,000 USD.

According to the developer team of IOTA, they have designed this exchanging network to minimize the cost of transactions and make the smooth and flexible relationship between humans and machines.

With the help of IOTA, one can perform very fast transactions with high scalability of the network and minimal transaction fees.

Thank you for reading!

Any suggestions or corrections will be highly appreciated.

Professor: @imagen

Special regards:

Cc: @steemitblog

by: @faizanwrites