Crypto Academy Season2 Week 1 - Homework Post for [@image] // INITIAL COIN OFFERING ( ICO): 17/04/21

Hello Prof. @imagen, congrats on your new appointment.

INITIAL COIN OFFERING (ICO)

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ICO in the world of cryptocurrency is a fund raising procedure used by a company creating a new coin to raise funds by offering investors with the new cryptocurrency token at a very low price which are paid for in either fiat or other cryptocurrency.

If the goal of the ICO fund raising is met, the tokens are promoted as currency. The ICO will be unsuccessful if the if the fund raised does not meet the least possible money required. ICO's are not regulated.

Before i go into the differences between ICO and IEO, i will write a bit about what IEO's are.

INITIAL EXCHANGE OFFERING (IEO)

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IEO is similar to ICO but this time around the crypto exchange oversee the process on the behalf of the company.

HOW IEO AND ICO ARE DIFFERENT.

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ICO is less transparent as there are no compliance rules to follow, IEO on the other hand is more transparent; Crypto exchange requires the company to to perform a due diligence procedure which demands that every detail be made public in their project

There are no intermediaries involved in ICO , but IEO's have intermediaries who serves as middle-men between the company and the investor

ICO is less safe as there are no commissions to ensure that it is safe to invest in, it is not the same in IEO's, they are safer as crypto exchange make sure that is legit, up to the task and not a scam

It is more decentralized; issuers connect straight with the investors. The same cannot be said for IEO; there are intermediaries involved which fades a part of its decentralization

ICO brought 'gas war' which is a discount to attract early investors, the earlier they invest the greater the discount whiles Investors win a random lottery tickets and get to be among early investors in IEO's

ADVANTAGES OF ICO

1. Any investor interested in the purchase of an ICO can do so, only specific investors chosen under the security exchange act of 1934 can invest
2. It is easy to invest in as there are no strict rules from intermediaries.
3. It is very fast to buy-in, investors connect straight to issuers, this makes it instant and very efficient.
4. Investors gain a higher return on their investment as there is no fee paid to middle-men

DISADVANTAGES

1. It is a high risk procedure and investors hope to receive high returns, scammers use this as an opportunity to scam investors.
2. They are easily hacked. Start-up companies do not have a robust security system as compared to the security system of the crypto-exchange.
3. It is too open to investors. Beginner investors who have less knowledge about crypto investing are allowed to invest and first time investors may lose the zeal to invest if there is a fraud.
4. It is not a guaranteed procedure. investors are not sure of their returns and issuers are not also sure of the success of their ICO.

ABOUT ARK ICO

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The project of ARK is to make the use of blockchain technology easy and develop solutions to satisfy various use cases with a framework comprising of the ARK core with a generic transaction interface (GTI). This allows developers to create preferred transaction types on a customized blockhain.

In 2016 ARK was founded and it raised about $800,000 in its ICO when it started in 5 Nov 2016 shortly after it was founded, It ended on 9 Dec, 2016. It started with a token price of $0.0100.
Investors received about 75% of token distribution, founders and project received about 25% with an overall ROI of about 3,868.4%.

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