What is an ICO and how does it work?

ICO has proven to be a revolutionary way to raise money for many companies and projects. ICO can be said as a mixture of traditional methods with advanced techniques. The main thing to consider here is that investors investing in ICOs are 100% risk-free due to the technology used.

So far, most ICO funds have been raised via Bitcoins (BTC) or Ether (ETH). When conducting an ICO, the project generates a Bitcoin or Ethereum address to receive funds and then displays it on the corresponding website. The procedure is the same as opening a bank account and then displaying it to people on a certain web page so they can send money.

An initial coin offering (ICO) is an illegal way to raise crowdfunding mainly through various cryptocurrencies (in a few cases fiat currencies) and is operated by cryptocurrency organizations to obtain the capital funds required to implement a project. In an ICO, a certain portion of the recently issued cryptocurrency is sold to investors in exchange for any legal tender or any other cryptocurrency. It can be said as a token sale or crowd sale, which involves receiving investment amount from investors and providing them with some features related to the project to be started.

An IPO, i.e. an Initial Public Offering, is a process somewhat related to the ICO, where investors buy a stake in the company’s ownership. When in an ICO, investors buy the company’s coins, which can increase in value if the business takes off.

The first token sale, i.e. ICO, was carried out by Mastercoin in July 2013. Ethereum raised money in 2014 through an ICO. ICO has taken on a whole new definition in the past years. In May 2017, there were approx. 20 offers and also a new web browser Brave’s ICO raised nearly $35 million in just 30 seconds. By the end of August 2017, a total of 89 ICO coin sales had been held since January 2017, worth $1.1 billion.

Investors send Bitcoin, Ethereum, or any other cryptocurrency to the specified address and in return receive new tokens that can benefit them greatly if the project takes a hit.

  • ICO is mainly done for cryptocurrency based projects based on decentralized technique. So, of course, such projects will only attract investors who have a keen interest in the concept of cryptocurrency and are friendly with the technology used.
  • An investor document really remains in the form of a web page, white paper, or web post. Some of these documents provide accurate details of the project, while others literally falsify its features to confuse interested parties. So, before you trust any white paper or white paper, do a quality check.