What is a crowdsale?

Blockchain technology has sparked interest in a lot of developers and businessmen. There are a lot of promising and ambitious projects that need to generate funding for their launch. Crowdsales are used to attract it.

What is a crowdsale

Crowdsale is a pre-sale of tokens before the ICO. It is organized to attract collective investment. During the crowdsale, you can buy digital assets of the future project. The proceeds are directed to the development of the startup and the organization of ICO. You may explore more about the initial coins placement in the article "Tokenization"

You can use Waves, EOS, Gnosis, Ethereum and other platforms to develop your cryptographic currency. They allow creating tokens based on blockchain technology for various purposes. You do not need a background in coding and cryptography to create a project.

Crowdsale is a simple way to accelerate the development of the project at the initial stage. Thanks to it, you can avoid the need for a long search for a large investor. Investors, in turn, get an important advantage – tokens can be bought on favorable terms. There are projects that offer to provide useful services for coins or pay dividends to their holders.

How to reduce risks when participating in crowdsale?

Crowdsale is even more risky than ICO. And yet there are ways to identify unscrupulous organizers of sales. A trustworthy promising project usually has such distinctive features:

• Availability of the required rules and agreements, which are published on the web-site and presented by the public offer.
• Correct and accurate documentation, whitepaper.
• Business registration.
• Completed working prototype.
• Presence of escrow. It is a special notional account for money, property and documents. They are stored in there until the fulfillment of agreed obligations or the occurrence of certain circumstances.
• Good reputation of the project development team.

Why hold a crowdsale?

Launching a blockchain is a time-consuming and expensive procedure. The process involves the developers team work marketing research and activities, as well as software support. Thanks to crowdsale, it is possible to attract collective financing to a new project and ensure the product's entry into the market.

Another goal of crowdsale is to sell tokens. Thanks to it, it is possible to draw a conclusion in advance about the demand for the developed project and its prospects. The demand statistics can expose flaws in the project and help to make it better. If necessary, you can make adjustments to the project. Statistics of coin sales will allow you to calculate the future income and profitability of the business.

With wise decisions and a pinch of luck , a crowdsale may bring huge returns on investment. Still, you should not take the word for everything that developers say. It is better to try to find more information about the project and get acquainted with the expert views. Usually during crowdsales, the cost of tokens is the lowest. If you have the opportunity to participate in such a sale, try not to miss it!