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Questions and Answers
What is an initial coin offering (ICO)?
What is an initial coin offering (ICO)?
- A form of crowdfunding using cryptocurrencies (correct)
- A government grant program for new businesses
- An insurance scheme for cryptocurrency investments
- A type of bank loan for startup companies
What are 'tokens' or 'coins' in the context of an ICO?
What are 'tokens' or 'coins' in the context of an ICO?
- Government-issued legal tender used for trading in the ICO market
- Virtual representations of stock ownership in a company
- Future functional units of currency if the funding goal is met and the project successfully launches (correct)
- Physical coins used for advertising the ICO
What is a potential advantage of an ICO for startup companies?
What is a potential advantage of an ICO for startup companies?
- Access to government subsidies for business development
- Avoiding regulations that prevent them from seeking public investment (correct)
- Inclusion in stock exchanges without meeting regulatory requirements
- Guaranteed backing from established venture capitalists
Why have ICOs been associated with scams and fraud?
Why have ICOs been associated with scams and fraud?
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What has been the survival rate of ICOs four months after the offering, based on the text?
What has been the survival rate of ICOs four months after the offering, based on the text?
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Study Notes
Initial Coin Offerings (ICOs)
- An Initial Coin Offering (ICO) is a fundraising mechanism in which a project sells its underlying digital currency, also known as tokens or coins, to early backers in exchange for fiat currencies or cryptocurrencies.
Tokens or Coins
- Tokens or coins are digital assets issued by a project to raise funds, which can represent a stake in the project, a voting right, or a unit of value.
Advantages of ICOs for Startups
- A potential advantage of an ICO for startup companies is that it allows them to raise funds from a global pool of investors, bypassing traditional funding sources such as venture capitalists and banks.
Risks and Scams Associated with ICOs
- ICOs have been associated with scams and fraud due to the lack of regulation and oversight, making it easier for fraudulent projects to launch and disappear with investors' funds.
Survival Rate of ICOs
- Based on the text, the survival rate of ICOs four months after the offering is alarmingly low.
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Description
Test your knowledge about initial coin offerings (ICOs), a cryptocurrency-based funding process involving the sale of tokens to investors in exchange for legal tender or other cryptocurrencies. Learn about the crowdfunding and investment aspects of ICOs.
