What is an ICO and how does it work?

The ICO has proven to be a revolutionary way to raise funds for many companies and projects. ICO can be called a combination of conventional methods and advanced techniques. The primary point to consider here is that investors investing in ICOs will be 100% risk free due to the technology used.

So far, most of the ICO funds have been raised through Bitcoins (BTC) or Ether (ETH). When performing the ICO, the project creates a Bitcoin or Ethereum address to receive funding and then, it shows up on the corresponding web page. The procedure is similar to opening a bank account, and then showing it to people on a specific web page so that they can send money.

The Initial Currency Offer (ICO) is basically an illegal way of raising crowdfunding through various cryptocurrencies (in some cases Fiat currency) and is used by cryptocurrency companies to obtain the capital funds needed to execute the project. In an ICO, a certain portion of the recently issued cryptocurrency is being sold to investors in exchange for a valid tender or another cryptocurrency. This can be called a token sale or crowd sale which involves taking the amount of investment from the investors and providing some features associated with the project they are launching.

An IPO, or initial public offering, is a process related to an ICO where investors receive shares in the company’s ownership. While at ICO, investors buy company coins whose value may increase if the business expands.

The first token sale, i.e. an ICO was conducted in July 2013 by Mastercoin. Ethereum raised money in 2014 through an ICO. The ICO has adopted a completely new definition in recent years. In May 2017, it was almost. 20 offers and most recently a 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 coins worth $ 1.1 billion had been sold since January 2017.

Investors send Bitcoin, Etherium or any other cryptocurrency to the given address and then in exchange, they get new tokens which can greatly benefit them if the project hits.

  • ICOs are primarily designed for cryptocurrency-based projects that rely on decentralized strategies. So naturally such projects will only compel investors who have a deep interest in the concept of cryptocurrency and are friendly to the technology used.
  • The document that belongs to an investor is actually in the form of a webpage, white paper or web post. Some of these documents show accurate descriptions of the project, while others literally falsify its features to confuse interested parties. So before relying on any white paper or e-document, check the good quality.