ICO stands for Initial Coin Offering.
An unregulated means by which funds are raised for a new cryptocurrency venture. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for Bitcoin.
Initial Coin Offerings are schemes used predominantly by startups and also by some established businesses, to raise the sums of money considered worthy by the marketplace based on the business case and technology platform laid out in the ICO’s Whitepaper, Roadmap and additional supporting commercial, technical and user documentation.
Think of it as a like an Initial Public Offering, except offering digital tokens rather than registered financial securities.
ICOs often raise funds against White Papers and Roadmaps, with Milestones promising functional releases. Tokens sold in ICOs are generally (but not always) intended to allow access to, or redemption of, functional services to be delivered by the project.
This places the funds raised by ICOs in the category of unearned income, rather than a securities issuance, at least in theory.
This is yet to be fully tested in various legal jurisdictions, but for now that is the accepted working definition and the means by which companies can run ICOs to raise funds to deliver future services, in much the same way that companies run Kickstarter crowdfunding projects to fund the product development, with pledges of future product supply generally underpinning the basis of contributions.
2016 saw the rise of ICOs, with the first and possibly still the most famous ICO, definitely the most controversial, being the Ethereum DAO (Distributed Autonomous Organisation).
2017 has seen a proliferation of ICOs launched in the crypto marketplace, with many of them now offering future services delivery commitments ranging far and wide beyond the bounds of cryptocurrencies or blockchain projects.
Many ICO projects have delivered staggering returns in the thousands of percentage point gains over a mere matter of months after their launch and listing for active trading across popular cryptocurrency exchanges.
Some Initial Coin Offerings have been beset with problems, such as having their wallets hacked, or vulnerabilities found in their funds escrow systems, resulting in loss of investor funds.
Many scammers are drawn to the Slack channels and Telegram groups in which ICOs are discussed, often posting fake ICO contribution page links in an attempt to phish funds from unwary potential investors who don’t make absolutely sure they are sending their funds to the genuine ICO contribution address.
Considering ICOs are essentially unregulated, Caveat Emptor, Latin for Buyer Beware, applies here, probably more than any other investment or project funding format.
There are many potential benefits for those who choose to participate in legitimate ICO project fund raisings, but there are just as many pitfalls and traps for the unwary.
Our intention here at HowToBuyTokens.com is to provide access to a range of ICO related news sites, resources and articles, so that you can be as informed as possible about both Initial Coin Offerings in general and specific ICOs in the market, such that you can make carefully considered decisions about which projects, if any, you choose to invest your crypto funds (usually Bitcoin and most often Ethereum) into.
Here is a short list of ongoing and upcoming ICOs as listed by TokenMarket.