Initial Coin Offering: What Do You Understand By It #007

in Steem Alliance3 months ago

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Hello great minds,

It is another beautiful day and I feel honored to come before you all today to discuss on an issue of great importance in the cryptospace.

In our last discussion, we learnt about an advantage of Initial coin offering in the cryptospace.

We learnt how democratized funding is an advantage of Initial coin offering, and today we shall be learning about another benefit of Initial coin offering.



BENEFIT OF INITIAL COIN OFFERING



  • LOWER COST:

Lower cost is a very crucial advantage of Initial coin offering in the cryptospace, and as we know, ico is a very effective technique used by project starters to raise funds for their crypto project, and this is mostly done through the issuance of selling of their native token.

Explained below are ways in which lower cost is an advantage of ico.

ELIMINATION OF INTERMEDIARIES

One of the features of ico that makes lower cost an advantage is because of it's elimination of intermediaries.

Using the traditional fund raising process as an example, companies are often dependent on bank's investment, legal advisors, underwriters to facilitate the process.

And these intermediaries place a substantial fee for their services which contributes to the overall cost of the fundraising campaign.

In contrast, the operation of ico makes use of the blockchain technology, which allows for a direct p2p transaction between the investors and the project.

LEVERAGING OF SMART CONTRACT

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Also, Initial coin offering leverages smart contract which are self executing contracts that has its agreement terms written directly into codes.

Smart contract play a huge role in automating different aspect of the fundraising process which include the distribution of tokens, and this further helps to confirm an efficient and transparent execution of fundraising campaign.

With the use of smart contracts, there will be no use of intermediaries such as the escrow services and this would reduce the cost associated with fundraising processes.

ABSENCE OF GEOGRAPHICAL BARRIERS

Another factor contributing to the lower cost advantage of Initial coin offering is what we know as absence of geographical barriers.

The traditional fund-raising techniques involves reaching out to international audience and this would require a high resources to comply with different regulatory framework.

Initial coin offering on the other hand has the ability to attract international investors without the need for an extensive regulatory compliance effort.

While regulatory consideration are very important, the blockchain technology has helped to streamline this process and make it more cost effective.



CONCLUSION



Lower cost with some of unique features of ico has proven to be an advantage of ico.

We have learnt how the elimination of intermediaries has helped to reduce cost of ico campaign in the cryptospace.

As we proceed, we shall learn more interesting things about ico.

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