What is an ICO and how does it work?

ICO has proven to be a revolutionary way for many companies and projects to raise money. ICO can be said as the mixture of conventional methods and advanced techniques. The primary thing to consider here is that investors who invest in the ICO will be 100% risk-free due to the technology used.

Until now, most ICO funds have been raised via Bitcoins (BTC) or Ether (ETH). While running the ICO, the project produces a Bitcoin or Ethereum address to receive funds and then, displays it on the respective web page. The procedure is the same as opening a bank account, and then showing it on a particular web page to people so they can send money.

The initial coin offering (ICO) is basically an illegal way to collect crowdfunding via different cryptocurrencies (fiat currencies in a few cases) and is used by cryptocurrency organizations to obtain the necessary capital funds to run the project. In an ICO, a particular part 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 that involves taking an investment amount from investors and providing some features associated with the project to be launched.

The IPO, i.e. initial public offering is a process somewhat related to ICO in which investors receive shares in the company’s property. While in ICO, investors buy the company’s coins that can increase in value if the business expands.

The first token sale, i.e. an ICO was conducted by Mastercoin in July 2013. Ethereum raised money for an ICO in 2014. ICO has taken on a completely new definition in the past years. In May 2017, there were approx. 20 offers, and even a recent web browser Brave’s ICO generated about $35 million in just 30 seconds. As of the end of August 2017, a total of 89 ICO coin sales worth $1.1 billion had been conducted since January 2017.

Investors send Bitcoin, Ethereum or any other cryptocurrency to the given address and then, in return, receive new tokens that can benefit a lot if the project is successful.

  • The ICO is basically carried out for cryptocurrency-based projects that rely on the decentralized technique. So, naturally, such projects would oblige only those investors who have a great interest in the concept of cryptocurrency and are friendly with the technology used.
  • The document that belongs to an investor really remains in the form of a web page, whitepaper or web post. Some of these documents show accurate details about the project, while others literally falsify their characteristics to deceive those interested. So before you rely on any white paper or electronic document, it’s best to go through a quality check.