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In essence, the developer publishes a limited number of tokens. By storing a limited number of tokens, they ensure that the token itself has a value while indicating that ICO has a goal to achieve. Tokens can have a predetermined price or may increase and decrease depending on how much purchase and sales are going on (consensus).
The token is basically an original currency that can only be used in the scope.
The ICO transaction is quite simple. If someone wants to buy tokens, they only need to send some funds to the ICO developers address. When the transaction is done, the buyer gets the appropriate number of tokens. So, it's as simple as the main idea of how ICO works.
If it is easy to do, then why do most ICOs fail?
The main reason behind the phenomenon can be traced back to the lack of awareness of the developers or entrepreneurs will be three pillars that must have a Token:
1. Cryptoechonomy
2. Utilities
3. Security
Without an understanding of the three components, a Token would be difficult to compete with thousands of other coins. To help your understanding, here's a description of each of the important pillars above:
1. Cryptoechonomy
Keep in mind, there are 2 words that compose the word Cryptoechonomy: Cryptography and Economics. Most developers are concerned only with the Cryptography section, without really paying attention to the Economy section. As a result, it is very rare to find ICOO tokens whose economic frameworks are mapped well before making its Whitepaper.
In order for ICOs to be of value in the long term, the economic side must be kept in mind, for the one who creates a price agreement in the crypto world is consensus; full awareness between the supply and demand sides. As seen today, most tokens are inflation only with a flawed economic model that cannot be sustainable for the long term. Not infrequently ICO offers a fairly high profit and only lead to a scam.
2. Utilities
If you want to use Token for business, you must really understand its role and maximize its usefulness, not just Follow The Crowd without knowing the ins and outs of Token and ICO. You must understand that "tokenization" can be a versatile tool to provide greater benefits to the business.
To maximize the Utility of a Token or ICO, there are a few things that developers and investors should really understand, including Rights and Obligations, Determining Exchange Rates, Tolls (Fees for Facilities), Functions, Currency Types, and Profits.
3. Security
The developers or companies that are going to hold ICO should surely pay attention to security issues. Once a platform is exposed to hacking that is either caused by a code error, phishing, or other reasons, the trust of the Token buyer will fade. As a result, demand (demand) will drop immediately and cause a decrease in interest in Token. This then can make Token quickly disappear from circulation, because no one is interested anymore to have it.
so ICO is one of the technological means to facilitate investment in crypto market.
sorry if my english is not good.
