ICO (Initial Coin Offering) or initial coin offering is an innovative way to attract investment in new promising projects.
To raise funds on the blockchain platform, a new cryptocurrency is released, which is called a token or coin. An analogy can be drawn with the issue of shares. Tokens are bought by investors for cryptocurrency (usually Bitcoin or Ethereum), which are traded on cryptocurrency exchanges after the ICO. Investors are judging to buy a share of the project company and are interested in its successful development. The money collected during the ICO is withdrawn into fiat currencies and then goes to the development and maintenance of the project.
The popularity of ICOs is explained by the fact that it is difficult to attract funding for new projects in the usual, traditional ways (bank, credit organizations, etc.).
Investors are attracted by profitability, which can be several times higher than a bank deposit. On the icostats website, you can see statistics on projects, including those that received extra profitability.
Today the most profitable IOTA project: ROI + 188273%; further – Ethereum + 94816%.
ICO can be compared to IPO (Initial Public Offering), the difference lies in the absence of regulation by the state and legal rights for the investor.
The main risks for investors when participating in an ICO is fraud by the organizers, since there is no regulation. And when investing, you need to take this aspect into account and carefully approach the choice of projects.
Eagerness also does not hurt – during the ICO of the Brave project, investors bought up all the coins in half a minute. Then it was collected $ 130 million.
Companies literally come out of nowhere and run Initial Coin Offering. Their number is constantly increasing and averages 2.75 ICOs per week (in 2016 – 1.5).
The total amount of funds raised already amounts to more than $ 1.8 billion. Detailed statistics on the website: coindesk
A calendar of upcoming initial offers can be tracked on the icoalert website.
Ratings, profitability and other statistics – on the icostats website.
Thus, ICO is a completely new way of interaction between the investor and the company whose tokens he bought. An investor interested in the successful work of the project and its further development. After all, the higher the cost of the token purchased in the Initial Coin Offering process, the greater its income.