Bitcoin is among the many cryptocurrencies that have gained investors’ attention over recent years. This virtual currency is also a digital asset that people use to store value. Thus, some people purchase and hold onto their Bitcoins, hoping this virtual currency will accumulate value over time. However, Bitcoin’s primary role was to facilitate exchanges via secure financial verifications and encryptions. But Bitcoin has evolved into a method of funding small businesses and startup companies.
Although an increasing number of people now trade Bitcoin on platforms like bitcoin-equaliser.com, others see it as a means for funding their business ventures. Ideally, you can use such systems to purchase Bitcoin low and sell it high. That way, you can benefit from the price difference because Bitcoin is a volatile asset whose price can fluctuate rapidly over a short period.
If you decide to fund your startup with Bitcoin, consider that this high volatility can be a drawback. Bitcoin’s price has varied from a few thousand dollars to $60,000. However, this volatility doesn’t mean Bitcoin can’t fund a startup. All you need are these tips to help you use this virtual currency to finance your business venture.
Choose the Best Bitcoin Fundraising Method
Bitcoin gives you several fundraising methods from which you can choose your approach. However, Initial Exchange Offering is the latest innovation that most startups prefer. That’s because platforms that allow this method create reputable revenue for conducting a crowd sale using this cryptocurrency. And this eliminates dubious personalities and scams from the equation.
A startup can benefit from issuing tokens with a problem-free and seamless process of launching Initial Exchange Offerings on a platform, compared to ICOs that most leave them alone. What’s more, IEO platforms’ excellent services enable startups to overcome the potential listing fees easily.
Consider Initial Exchange Offering
A crypto exchange can facilitate an Initial Exchange Offering. These platforms implement token sales while token issuers pay listing fees. Also, a percentage of the token remains with the venue after the IEO sales.
The platforms also sell the startup tokens while listing their coins after the deal. An exchange can provide incentives to facilitate marketing operations while taking a specific tokens’ percentage.
IEO’s participants don’t contribute to smart contracts. Instead, they open accounts with the crypto exchange. After joining the platform, they fund their digital wallets with their coins to purchase the startup’s tokens.
You can also get private funds to finance your startup, with this option providing the advantage of enhancing public trust. Private funding can be in the form of angel investors, private equity firms, or venture capitalists. In some startups, cryptocurrency security can make this option more appealing.
Initial Coin Offerings
Initial Coin Offerings are equivalent to Initial Private Offerings in traditional businesses. But this option comes in the crowdfunding form in the crypto world. It entails investors that purchase tokens that allow them to access the platform.
Due to the lack of regulations, this approach has controversies regarding raising funds. According to the US Securities and Exchange Commission, Bitcoin and other virtual currencies are securities. Consequently, they face regulations by the federal securities laws.
However, ICOS can fund a new program or fund an organization’s operations. That’s because ICOs can raise the capital a startup needs to get off the ground.
Once you’ve decided the approach to use when funding your startup with Bitcoin, talk to a legal team. Ideally, seek a legal expert or team with experience in the crypto world. That’s because new tax regulations and loopholes in the crypto world could lead you to trouble with authorities if not careful.