First an ICO is a request for money from the general public for funding a particular project. The backers of the project know they’re not donating to a charity. Rather they’re making an investment. This investment opportunity is the first investment open to the public for that particular project. Hence the term “Initial Coin Offering”. Investors hold ICO crypto currencies for their investment made. There is no share or any dividend held by ICO investors.  Most of the details of an ICO can be found on the ICO pages on the website. So why is there need for ICO whitepaper?

ICOs are just a copy of IPOs existing in the cryptocurrency world: Many investors are used to the IPO style of investing. However, the Bitcoin craze made investors to consider ICOs for their investment. But, since they’re coming from the fiat money world, requesting for money without a whitepaper won’t be accepted by investors.

ICOs are trying to get a legal footing: In many countries, the government is regulating ICOs from the background. Requesting money without writing a white paper may sound like a get rich quick scheme to the regulators.

ICO whitepapers give details about the ICO: There is more details to be found on ICO whitepapers than on ICO webpages. Personal information about ICO holders and project description are written on the ICO whitepaper. For this reason, investors often get the whitepaper first before investing.

Leave a Reply