If you answer the question, what is a token sale in understandable words, it is the sale of startup cryptocurrencies to the very first buyers. Early investors buy new cryptocurrency directly from the project team at the lowest price. Thus, they finance the first steps of the team, their promotion and entry into the cryptocurrency market.

In fact, this is a fundraising method of crowdfunding, when money is collected to implement the ideas of the project team. If investors like the idea, they join the funding. In the future, such sponsors can count on profits if the project successfully enters the market. 

However, it is worth noting that not every team manages to go through all the stages of formation. Sometimes there are technical and organizational issues that make it difficult or impossible to further advance the project.

Nevertheless, early investors still purchase tokens of new projects. Participation in tokensales has gained quite a lot of popularity in recent years. First of all, buyers expect to sell the purchased crypto assets for a much higher price after they are listed on the exchanges. 

Benefits for the project team

 

In addition to the fact that a token sale is a great way to raise funds for the development of a cryptocurrency project, there are several other reasons for holding it.

Firstly, it is also one of the ways to get a supportive community. After all, after the acquisition of tokens, investors are interested in the development of the project. They will follow the news, developments, participate in communication with other potential buyers. Early investors can also be seen as a kind of advertising option for the project. This works well, especially if they are well-known leaders in the cryptocurrency community. Therefore, with the help of a token sale, project teams also receive an interested community.

Secondly, tokensales do not require complex and lengthy legislative registration, as, for example, with an IPO (initial public offering of company shares). Projects do not even have to register to raise the first funds for their idea. The tokens of these projects themselves can even become security tokens in the future if the company successfully builds its work and wants to further develop within the legislative framework. In addition, security tokens may also bring permanent dividends to investors in the future.

In conclusion, we note that the token sale is a mutually beneficial option for raising funds for new projects. It gives investors the opportunity to make significant profits. And for teams of new projects – to successfully implement their plans and achieve excellent results without having their own funds. However, it is worth remembering the risks associated with the possibility that the desires of both parties may not be realized for various reasons. Therefore, participation in token sales is also always a risk for the investor. Approach carefully to the choice of such investments