Hello, in this lesson we are going to cover my CE o 's which stands for initial coin offering. They might sound similar something else you've heard of which is probably IPO, which is an initial public offering. And this is when a company floats his shares on the stock market for everyone to potentially buy. So at its core, an Ico is a fund raising Ray's in mechanism. mechanism. A lot of people compare on to IPO but there's actually a lot of differences.

So an IPO an IPO is regulated. It is try And trusted usually, usually usually occur at later stages in a business off the seed round after several series ran the funding and then the IPO. So, a lot of companies especially in the technology in the streets or people live in the ultimate goal is even an IPO. So getting on the stock market or essentially selling your company, so either selling or selling shares of your company off on the stock market, where as an Ico most part, most part isn't the most part Isn't regulated or unregulated for now is obviously the early day for crypto based platform. So it will get better and better and exactly usually occurs at early stages of company have an idea. So, usually what happens is a white paper is published along with their idea and the white paper essentially, usually from a technical point of view, explains their concept how their ideas going to a kind of products going to less of a marketing document and more to say, we know what we're doing.

This is what we plan on doing it. So how do again Ico do I just give money? Not quite. The first thing you need to know is that what it does is sells it sells new crypto currency tokens, tokens that underlie new projects. So you know, new projects that our company has, and this is more importantly a big company. So he sells these new new tokens that at the moment current, you can't really do much with them.

And this is in exchange. So this is exchanged for cryptocurrency such as ether, or Bitcoin or something else a lot of time it is ether and aetherium based platforms that you do Ico, but you could do it for other currency as well such as Bitcoin. So you create your own new cryptocurrency. Essentially, these tokens are exchange for already existing big cryptocurrency which have quite a lot of appeal which have a lot of adoption and that is the fund the company These are great, the great for in gauging with the company and with the community and obviously vice versa they will be with the company is more of a personal touch. So you can think of this similar to crowd funding platforms such as Kickstarter and Indiegogo platform like Kickstarter have given way to companies like Oculus and many other really, really cool company so it's actually more effective.

To platform like Kickstarter and Indiegogo, where you don't give a share in your company, but what you do is actually sort of just almost like give rewards. We'll discuss dog rewards in a second. One of the disadvantages is there are not of fraudsters because it's not very well regulated at the moment. There are people there are publishing white papers. There are authentic just like 1020 paid marketing presentation of document. And they're not actually doing any technical on this gain or lose money in the summer.

They just try and run away obviously, there are institutions that are trying to fix this by putting certain conditions in place by having like an escrow account, and that need several signatures by different private keys to be able to To get the funds and use them, and there's usually an individual that is impartial to the idea to the idea that is part of all of this private key of almost like this can Satyam a nother difference to an IPO? Is that usually a time limit that you can actually buy these tokens. And so again, that's another big similarity to crowdfunding like Kickstarter because they have a time limit. They can raise more, but they can't raise less. There is a maximum number of tokens that can be issued as well. So Obviously, that's a guess sort of similar to an IPO.

And that's not that's more similar to an IPO compared to a regular crowdfunding. It's already mentioned. It's not like shares, because you don't have control of a portion of the company. But though they're not like typical shares in a company, they can still be traded. But if I have these new crypto tokens in this amazing new company called either No, and company, and I can buy this crypto tokens, I can trade them, they have value, and the value can go up and down. And also, I can also spend the tokens spend that opens on stuff.

Obviously, most sort of merchants won't accept these new token but they can actually sometimes be used on the actual companies. product itself so you can have fun day now key access their product. So, if you check out my previous video which I did on data storage within the block of the uses of blockchain section, I talked about a company called store J. And this was a decentralized blockchain based data storage company. And they had a Ico they raised money. And what they are allowing you to do is actually use the tokens that you got from the Ico to purchase storage space, which is, which is pretty cool.

So if you really believe in this company that I would only recommend if you to invest if you like, really believe in what they're doing, and you have faith in them. Then the you would have to buy storage space. So you could invest and support them. But he didn't just go to that point, because with Kickstarter, depending on how much you invest, usually like the first few or investment bracket, you don't really get merch you might get like a thank you email or like a T shirt, you know, just minor stuff. Then if you get to a certain amount, you need roughly the cost of the product. And you actually get that product then then beyond that you get more products, potentially a visit to the company and have a meal with the creators on the company as well.

But with this, it's similar to that. But you could actually use those tokens within the company, obviously depends on what the company is doing. So you might not be able to use them within the company. But this is just a sort of a really cool concept. I think Icos are going to change the future. Future of fundraising, they're going to make way for a lot of people to be able to easily raise funds in a, in a very unregulated market.

And to an extent, that's going to be good, because you're going to do it very fast, really quickly reduce the expenses. Obviously, there'll be fraudsters, and I think will have certain in systems that will be implemented over the next few years to help combat that, but keep the sort of the speed nature of Icos still being one of the main aspects that make it attractive. So this has been a video on initial coin offerings. If you have any questions, feel free to reach out. And as usual, thanks for watching, and I look forward to seeing you in my next lesson.