What is an ICO?
Here at Camuso CPA PLLC, we provide consultations and services for better understanding and ease in doing business. Initial Coin Offering (ICO) is a new business paradigm supported by blockchain technology. It is also known as “token sale” or “token launch”, where the company creates a new product with an associated utility wanting to build an ecosystem of stakeholders upfront who will benefit from purchasing the product early.
Is there something worth to consider about ICO that had taken the market?
ICO allows building an ecosystem of users and stakeholders based on an integrated token that provides utility to the users and payment to the service provider. The challenge lies primarily in the Ethereum network. As token sales volume increases with some improperly designed token sales model transaction, some issue arises such as: delayed distribution of tokens, extreme Ether price vitality, slowed functionality of Ethereum based Daps, and exceedingly high gas that inflates the token value.These combined issues can affect future token sales that may affect confidence of buyers in the token market. However, like any new technology, process or business, it has taken some sifting through the rubble for the gems to emerge.
How is coin different from token?
A coin is a unit of value native to a block chain to incentivize the network of participants to use the block chain. The sole purpose of a coin is to exchange value. Examples of these coins are: Cryptocurrencies Bitcoin, Ether, Ripple and Lite coin. While the tokens are created by developer on top of the currency protocol (Ethereum) as smart contract. It can have functionality beyond an exchange of value. It can represent any asset or functionality desired by a developer.
By creating a token that has inherent product utility, a company can secure network of suppliers and buyers that is difficult to attain so rapidly by any other mechanism. This is an exciting new opportunity for companies unmatched by any technology today.The consistent and sustained ecosystem of stakeholders, addressing token market issues, diligent token buyer and other regulatory actions will determine whether token sales will continue to flourish and sustain longevity in the rapidly growing market.
Here at Camuso CPA PLLC, we do have the ability to offer cryptocurrency tax services to our clients. If you are interested to know more about ICO and how this might benefit your business, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answer any questions you have.