A Cryptocurrency Crowdsale can be stated to be defined as a concept that consists of funding of the project through the sale of the digital tokens. It enables the buyer with the right to participate in the idea of the funding by the sale. In a shell, a project is funded or financed through the sale of cryptocurrency tokens.

For instance, tokens are issued on a blockchain platform such as Bitcoin blockchain or an Ethereum blockchain, these tokens are like the tickets to receive a service that the particular project offers. An example would be for say, the project is funded by crowdsale and it is a mobile application that facilitates ride-sharing cab. So in the network, the user can use the tokens to pay for the rides or if you are the owner of the vehicle then you are paid in tokens. Basically, a token is like the currency in the network of the platform.

It consists of a startup company that needs financing for a project or a service that is in development by the means of raising funding through selling its cryptocurrency in the market space and providing participation in the project after its launch.

Wherein the investor participates in the project through crowdsale tokens and has to wait till the project is running. However, the value of the token is determined by the success of the project.

A crowdsale token does not provide voting rights, credit, or ownership of the project. 

Crowdsale occurs before a project has officially launched its services wherein it is designed to generate funds in order to develop the projects. Many platforms accept altcoins as a currency and can be purchased on exchanges. While post the crowdsale, the tokens are usually bought and sold in an open market space through its market value wherein also the value of the tokens depends on the success of the crowdsale project. This method is for the early adopters that believe in a project and its success which would lead to earning profit for the user. And since crowdsale occurs at an early stage of the business, the tokens are usually sold at a low price. Many times, the company also pays a bounty to the investors for the additional help given by the user such as specialist skills or bringing more investors on board.

Also Read, Investing In Cryptocurrency This 2021

The company hosts its crowdsale on a designated blockchain-platform. Ethereum crowdsale is pretty known and in use in the crowdsale space. 

The No-Go for Crowdsale

Cryptocurrency Crowdsale is not regulated by the SEC - Securities and Exchange Commission. The crucial disadvantage of crowdsale is its accountability. The instance could be when the company or the project shuts down or ghost. This factor does not hold any accountability to protect the investment made by the users. The other factor is whether the project is capable to create a profitable business and since there are minimum regulations and legal framework in the cryptocurrency crowdsale, one has to be pay due diligence.

Hence, before participating in cryptocurrency crowdsale it is of importance to have the research work done on the project, its reputation, its vision, the team working on the project, its background, and so forth. The research work on the viability and reliability of the project is important when participating in crowdsale.

Also Read, What Is An ICO?

Alternatives

Apart from crowdsale, there are many such alternatives in the market space such as ICO - Initial Coin Offerings - these are the tokens that are based on the company’s value while facilitating ownership or voting rights and it falls under the regulations of SEC - Securities and Exchange Commission.

Conclusion

Cryptocurrency Crowdsale is a great tool for both the ends - investors and the traders to invest through funding and speculating on the projects that are promising to generate profits in the future and also for the startups that need financing. The promising the idea of the project - the more the cryptocurrency crowdsale and benefits for both the parties.