Blog

What is ICO?

DEFINITION of ‘Initial Coin Offering (ICO)

An unregulated means by which funds are raised for a new cryptocurrency venture. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for Bitcoin.

Also called an Initial Public Coin Offering (IPCO).

BREAKING DOWN ‘Initial Coin Offering (ICO)’

When a cryptocurrency startup firm wants to raise money through an Initial Coin Offering (ICO), it usually creates a plan on a whitepaper which states what the project is about, what need(s) the project will fulfill upon completion, how much money is needed to undertake the venture, how much of the virtual tokens the pioneers of the project will keep for themselves, what type of money is accepted, and how long the ICO campaign will run for. During the ICO campaign, enthusiasts and supporters of the firm’s initiative buy some of the distributed cryptocoins with fiat or virtual currency. These coins are referred to as tokens and are similar to shares of a company sold to investors in an Initial Public Offering (IPO) transaction. If the money raised does not meet the minimum funds required by the firm, the money is returned to the backers and the ICO is deemed to be unsuccessful. If the funds requirements are met within the specified timeframe, the money raised is used to either initiate the new scheme or to complete it.

Early investors in the operation are usually motivated to buy the cryptocoins in the hope that the plan becomes successful after it launches which could translate to a higher cryptocoin value than what they purchased it for before the project was initiated. An example of a successful ICO project that was profitable to early investors is the smart contracts platform called Ethereum which has Ethers as its coin tokens. In 2014, the Ethereum project was announced and its ICO raised $18 million in Bitcoins or $0.40 per Ether. The project went live in 2015 and in 2016 had an ether value that went up as high as $14 with a market capitalization of over $1 billion.

ICOs are similar to IPOs and crowdfunding. Like IPOs, a stake of the startup or company is sold to raise money for the entity’s operations during an ICO operation. However, while IPOs deal with investors, ICOs deal with supporters that are keen to invest in a new project much like a crowdfunding event. But ICOs differ from crowdfunding in that the backers of the former are motivated by a prospective return in their investments, while the funds raised in the latter campaign are basically donations. For these reasons, ICOs are referred to as crowdsales.

Although there are successful ICO transactions on record and ICOs are poised to be disruptive innovative tools in the digital era, investors are cautioned to be wary as some ICO or crowdsale campaigns are actually fraudulent. Because these fund-raising operatives are not regulated by financial authorities such as the Securities Exchange Commission (SEC), funds that are lost due to fraudulent initiatives may never be recovered.

3 Comments

  1. prada sunglasses

    I actually wanted to type a simple message to thank you for some of the remarkable techniques you are sharing at this website. My prolonged internet look up has at the end been compensated with useful points to talk about with my colleagues. I would point out that we readers are definitely lucky to exist in a wonderful website with very many brilliant individuals with very helpful points. I feel rather privileged to have used your webpages and look forward to so many more brilliant minutes reading here. Thanks a lot once again for everything.

  2. kobe shoes

    You should take part in a contest for the most effective blogs on the web. I will suggest this website!

  3. ysl bags

    Aw, this was a really nice post. In concept I want to put in writing like this moreover ?taking time and precise effort to make an excellent article?however what can I say?I procrastinate alot and in no way seem to get something done.

  4. Howardgaice

    Your comment is awaiting moderation.

    Nicely put. Thanks.
    https://nicktambone.com/
    us pharmacy no prior prescription
    canadian pharcharmy
    canada pharmacies online
    north west pharmacy canada

  5. Howardgaice

    Your comment is awaiting moderation.

    Excellent content. Thank you.
    http://canadianpharmacyntx.com/
    best online canadian pharcharmy
    canadian viagra
    canadian pharmacies without prescriptions
    online pharmacies of canada

  6. Howardgaice
  7. Howardgaice
  8. Howardgaice
  9. Howardgaice
  10. Howardgaice
  11. Howardgaice
  12. Howardgaice
  13. Howardgaice
  14. Howardgaice
  15. Quentinviobe
  16. Quentinviobe
  17. Quentinviobe
  18. Quentinviobe
  19. Quentinviobe
  20. Quentinviobe

    Your comment is awaiting moderation.

    Amazing a lot of superb material!
    http://canadianpharmacymim.com/
    mexican pharmacies shipping to usa aarp approved canadian online pharmacies canadian drugstore reviews canadian pharmacies
    canadian drugs
    buy prescription drugs online
    cheap canadian drugs
    canada drugs online
    canada pharmacies
    canada online pharmacies

  21. Quentinviobe
  22. Quentinviobe
  23. Quentinviobe

    Your comment is awaiting moderation.

    Beneficial forum posts. Thank you.
    http://canadianpharmacysilo.com/
    mail order pharmacies canadian cialis best non prescription online pharmacies canada drugs online
    canadian pharmacy viagra
    no 1 canadian pharcharmy online
    rx price comparison
    canadapharmacy com
    rx pharmacy
    pharmacy online mexico

  24. Quentinviobe

    Your comment is awaiting moderation.

    With thanks. Lots of write ups!
    http://canadianonlinepharmacynnm.com/
    online pharmacy no prescription needed canadianpharmacy best non prescription online pharmacies canada pharmacy
    mexican pharmacies
    pharmacy canada
    mail order pharmacy
    canadian pharmacy no prescription
    costco pharmacy pricing
    canadian pharmacy king

  25. Quentinviobe

    Your comment is awaiting moderation.

    Good posts. Cheers!
    http://www.canadianpharmacymsn.com/
    canada pharmacy online orders canadian drugs canada pharmacies without script canadian viagra
    global pharmacy canada
    canadian rx
    canada pharmacy online orders
    canada pharmacies
    canada meds
    canada drug

  26. Quentinviobe
  27. Quentinviobe
  28. Quentinviobe

    Your comment is awaiting moderation.

    Terrific information, Appreciate it!
    http://talahicc.com/
    prescription pricing global pharmacy canada best online pharmacies no prescription canadian pharmacies
    my canadian pharmacy
    pharmacy price compare
    canadian viagra
    drug costs
    cheap drugs online
    canada pharmacy online no script

  29. Quentinviobe
  30. Quentinviobe
  31. Quentinviobe

    Your comment is awaiting moderation.

    You actually said it perfectly.
    https://nicktambone.com/
    cialis canadian pharmacy canadian online pharmacy best online pharmacies no prescription canadian viagra
    canadian pharmacy meds
    get prescription online
    online pharmacy canada
    online drugs
    canadian pharmacy uk delivery
    compare rx prices

  32. Quentinviobe
  33. Quentinviobe
  34. Quentinviobe
  35. Quentinviobe
  36. Quentinviobe
  37. Quentinviobe
  38. Quentinviobe

Leave a Comment

Your email address will not be published. Required fields are marked *