Initial Coin Offering (ICO)

Initial Coin Offering (ICO) is a type of crowd sale or crowdfunding using crypto assets to raise capital to launch crypto projects. Any crypto project looking to raise funds can create their app or coin and use ICO as a mode to raise funds to conduct business.

In the cryptocurrency world, this is perceived as similar to IPOs. An ICO usually begins with an organization coming up with a whitepaper, detailing their project objectives, how they wish to distribute, and how many tokens need to be mined. Once a detailed plan is laid out to the investors, the project developers then seek potential investors to launch their project.

The tokens sold via an ICO offer utility can later be exchanged by the user for a service or a product. In a few cases, these tokens also represent an ownership stake within the startup. ICOs were quite popular during the 2017 bubble. However, they have received a lot of criticism since these ICOs can be easily launched without any regulatory overview, meaning they often attract inexperienced investors, thereby mooching them off their money. Initial exchange offerings (IEO) and security token offerings are better alternatives to ICOs, given the current reputation of these crowdfunding events.