What Are ICOs? The Crypto Crowdsale Simplified
September 21, 2017
If you’re following cryptocurrencies, you’ve probably heard of ICOs. There have been so many ICOs popping up this year that it’s nearly impossible to follow them all. But if you’re new to the crypto game, you might still have questions about what ICOs actually are.
An ICO, or an Initial Coin Offering, is the cryptocurrency version of an IPO, or Initial Public Offering. An IPO is an event held by a privately owned company to raise capital and to begin the process of offering stock publicly. An IPO is regulated by the government, which means that it is a complex legal and bureaucratic process.
ICOs are different. An ICO is like a crowdfunded IPO. More precisely, an ICO is a crowdsale in which a startup accepts a particular cryptocurrency (most accept bitcoin or Ethereum) in exchange for the startup’s own tokens, or cryptos, in order to fund the startup itself or a particular project. The idea is that their new token will increase in value as along with the project.
Although the Securities and Exchange Commission did recently rule that some cryptos should be more regulated, the market is still functioning largely free of the regulations imposed on IPOs. This means that startups can hold ICOs with very little red tape. For individuals, as long as you do your due diligence researching (you can read tips here [link to article 2]), investing in ICOs can be almost as easy as buying a book on Amazon.