All you need to know about initial coin offerings (ICO)

If you’ve heard the term ICO but are unsure of its meaning, this could be because it is a fairly new term, only having been around for a few years. ICO stands for Initial Coin Offering – a method that has become available due to the rise of digital currency.

Digital currency is usually used in the same way as physical currency. The more digital tokens a person has, the more they can get with it. But these currencies need to start somewhere: they can’t just appear and start to circulate. Someone has to come up with one and tell people about it.

Starting up a digital currency takes time and money. A digital currency needs backers to make it successful. If not enough people know about the project when it launches, then it is obviously going to fail, and people will lose their money.

That’s where an initial coin offering comes in.

An ICO is a way for the new project to raise funds so that it can be created and launched. The people behind the project tell people about their new idea, usually on some sort of forum. They describe the main features of the project and what they hope it will achieve; the more information the better, as people will feel more confident in investing their time and money.

Some people would describe giving money to an ICO as a donation, as there is no guarantee that the person giving the money will get their money back, let alone make a profit. However, the money they are giving are going to a project that they believe in and think could do well in the future, so they want it to succeed. Many people would call it an investment, as they participate because they think that the project will take off, and that when it does they will make more than they gave. (That’s not all – they’ll have participated in the creation of a new digital currency.)

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Once someone has invested in a new digital currency, they get a share of the initial coin tokens given out. As the project becomes more well known, these tokens increase in value. Lots of current digital currencies have been created in this way, even some of the most popular and successful. An ICO usually takes place before a project is completed. The money gained is used to fund founding team expenses as well as expenses such as marketing.

One successful example of an ICO being used to fund a successful digital currency project is Ethereum, a public blockchain-based distributed computing platform. The platform was created in 2013 by digital currency researcher and programmer Vitalik Buterin. During July and August 2014, the development was funded by an online crowd sale that raised a lot of money. To date, it is still one of the largest ICOs in terms of money raised. People bought the Ethereum value token with bitcoin, another digital currency. Not long after, the platform raised enough money to launch, and although there were some questions about its security, it really took off.

Many other ICOs have been created since then. In 2014, the main projects were the likes of Xcloudcoin, Breakoutcoin, and Sembrotoken. Projects in 2015 included MaidSafecoin, Neucoin, and Augur.

In 2016, the numbers grew even more, with many new digital currencies coming into the market. Some of the main projects here included Singularity, First Blood, Lisk, Waves, Kibo, and Golum. Of all of these, Ethereum was still the most successful.

None of these projects would have been possible without an ICO.

Over the next few years, it is likely that we will see a large growth in the number of ICOs on the internet.

The developers themselves would not have had enough money to fund the project: the process can be very expensive from start to finish, especially to make a digital currency successful. When that does happen, however, the rewards can be great: this is why more and more people every year are willing to invest their personal money to make it happen. Over the next few years, it is likely that we will see a large growth in the number of ICOs on the internet, but how many of these will be successful no one knows.

Here’s an infographic that provides an overview of the space.