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 called a combination of traditional methods and advanced methods. The main thing to consider here is that investors investing in an ICO will be 100% risk-free due to the technology used.

Until now, most of the ICO funds have been raised through Bitcoin (BTC) or Ether (ETH). When performing an ICO, the project creates a Bitcoin or Ethereum address to receive funds, and then displays it on the corresponding web page. The process is the same as opening a bank account and then displaying it on a specific web page to people so they can send money.

An initial coin offering (ICO) is basically an illegal way of raising funds through crowdfunding through various cryptocurrencies (in some cases, fiat currencies) and functions by cryptocurrency organizations to obtain the capital required for a project. In an ICO, a certain portion of a newly released cryptocurrency is sold to investors in exchange for any legalized tender or any other cryptocurrency. This can be called a token sale or crowdsale, which involves receiving an investment amount from investors and providing them with some features related to the project to be launched.

IPO, ie. an initial public offering is a process, somehow related to an ICO, in which investors receive shares in the company’s ownership. During an ICO, investors purchase the company’s coins, which can increase in value if the business grows.

The first token sale, i.e. ICO, was conducted by Mastercoin in July 2013. Ethereum raised money through an ICO in 2014. ICO has taken on a whole new definition in recent years. In May 2017, there were approx. 20 offerings, as well as the recent Brave web browser ICO, raised around $35 million in just 30 seconds. By the end of August 2017, there had been a total of 89 ICO coin sales since January 2017 worth $1.1 billion.

Investors send bitcoins, ethereum or any other cryptocurrency to a specified address, and then in exchange they receive new tokens that can benefit them greatly if the project takes a hit.

  • ICOs are mostly held for cryptocurrency-based projects that rely on decentralized techniques. So, naturally, such projects will attract only those investors who show great interest in the concept of cryptocurrency and are friendly to the technology used.
  • An investor-owned document does remain as a web page, white paper, or web publication. Some of these documents show accurate information about the project, or some others literally fake its features to mislead interested parties. Therefore, before relying on any document or electronic document, it is better to undergo a quality check.