From a guy who helped founders raise more than $280 million
Why will ICOs rule or NOT rule the worldHow to Initial Coin Offerings raise millions without giving equity?
There are more ways this is done usually, as coins or tokens can be different from one another, but here is one standard way. The coins offered are for a certain utility or something that will be automated and that the users can access. Think of medical records that are accessed via a blockchain making sure they are protected and accessible globally at the same time. Every time someone uses this medical blockchain network, she or he needs to buy the coin that allows this network to function. The more people use the network the more its coin value increases.
The reason why when more people access their medical files on the network the more value of its digital coins increases is that they also exist in limited quantities! Hence, there are capital gains for investors just like with stocks. For coins usually there is no interest or dividends, just ownership of the currency used in a small economy. Companies can still take fiat dollars and euros for providing services of their network, but usually they need to convert them to their coins/tokens! Once they do, the value of the tokens increases!Case study example
- Invested 40,000 of their own money including travelling costs
- Started in August and finished everything in February
- Raised $24 million and kept 50% of their coins (tokens) worth $14 million
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