What Is a Private Sale?
A private sale, as its name suggests, is the sale of coins or tokens to specific early investors. These types of sales are usually unannounced and not revealed to the general public. Blockchain companies that hold private sales choose which investors they want to invite to the event. The goal is to attract prominent early investors to fund the project in return for cryptocurrency that may yield high returns.
A Deeper Look at This Term
Private sales offer numerous benefits to both investors and companies, such as:
- Investors receive highly discounted cryptocurrency prices in comparison to conventional crowd sales and public sales.
- The discounted rates mean that when the coins are released to the public, there is a possibility of quick and high returns from these sales.
- Companies can receive significant funding from institutional investors, helping them to fund project development.
While private sales have their advantages, they have been criticized for excluding average investors. Also, having high portions of the cryptocurrency in the hands of a few investors leaves the coin or token open to price manipulation, like pump and dumps.
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