Understanding smart contracts and their need for an ICO
Imagine that you need something from a vending machine, say a packet of chips. All you are required to do is go to the machine, input the required conditions, insert a coin for transaction and you are done. The bonnet pops and you get your packet of chips.
On the contrary, if you had gone to a restaurant and have an attendant serve you your favorite food, you would be concerned about your order and you would have to wait for some time for the attendant to finally serve you the food.
What is clear from the scenario aforementioned is that people are more confident when a machine is involved in completing a task rather than human involvement. Reason being, humans are limited in storage ability and logical capacity.
Smart contracts are awesome
Smart contracts are computer codes that are generated to imitate real-world legal deals through executable command lines that work independent of human interference. These codes help ensure that the transactions run smoothly, without deviating from the code clause that constitute them.
This is the reason why most people opt for crowdfunding activities like Initial Coin Offerings (ICO) that allow credible projects with great potential to raise the amount of money that they need.
Whenever a new token coin cryptocurrency is released into the market, one challenge that is always there is to determine how would a project be at the end of its campaign. Although the market has witnessed various failed projects, the ones that have been successful have done incredibly good.
Smart contracts give ICO investors the courage and confidence they need to support a specific project. Smart contract codes act as an intermediary between the developers and the investors. The funds are transferred to a particular address where they are stored and can be examined throughout the project development process.
Smart contracts also issue tokens from the developers to the investors in the hope that if a project becomes more successful then the tokens can be exchanged back to the currency.
All credible and genuine ICO projects nowadays make use of smart contracts. Thanks to these contracts, investors can now have more faith in developers, who can in turn deliver what they promised.
Another noteworthy feature of smart contracts is the level of transparency they provide to the decentralized system. It is easy to see how many tokens have been released and if they are of the same value as put forth in the whitepaper.
Why are smart contracts required for an ICO?
Smart contracts give the following:
A large number of people may participate in token coin cryptocurrency sale, and it could be cumbersome if the tokens are transferred manually or individually. The entire process could be simplified by coding a program for fund distribution as and when required.
It is hard to gain people’s trust in a system that is decentralized and does not have any regulation, especially when the project has not acquired mainstream adoption. However, with smart contract codes in place, an ICO project can build credibility and win investors’ confidence.
A common challenge for all start-ups is to ensure smooth and continuous journey. A large number of ICO projects have successfully scaled through their crowdsales and many of them have been fortunate enough to achieve their hard caps. Smart contracts help ensure a stable relationship between developers and investors.
Proper implementation of smart contracts makes them really hard to hack. Furthermore, smart contracts are protected with complex cryptography, which helps keep the documents safe.
As smart contracts eliminate the need for a third-party intermediary, they put you in complete control of your agreement.
To sum up, smart contracts are extremely favorable for any token coin cryptocurrency. Even the investors performing due diligence of an ICO project, prior to investment, are looking for this important feature nowadays.
Cryptoxygen is one of the genuine and credible ICO projects with its smart contract built on Ethereum platform and OXY2 utility token developed on ERC20 platform. Cryptoxygen aims to be a secure platform to buy, sell and store cryptocurrencies with ease. It also offers online crypto trading courses and social trading, where crypto beginners can follow successful users on the platform and analyze their trading patterns.