An initial coin offering (ICO) refers to the creation and sale of digital tokens. In an ICO, a project creates a specific number of digital tokens and offers them for sale to the public, usually in exchange for fiat currency or other cryptocurrencies like Bitcoin or Ether.
There are two significant reasons why the public could be interested in the tokens offered by ICO’s. Firstly, the token must have an inherent benefit. Owning the token will mean the holder has access to a service or a share in the project’s earnings. Secondly, the interest in the token will continually increase in demand, meaning that the price of the token will keep on growing.
Startup companies can use token sales to raise capital for their business. As a form of digital crowdfunding, ICO’s can enable startups to bypass regulatory compliance and intermediaries like financial institutions, stock exchanges, and venture capitalists. Token sales can also allow startups to fast-track the adoption of their project by making it profitable for token holders to use.
Tokens that eventually have successful sales are usually listed on exchanges, where initial investors in the ICO can sell their shares, and new buyers can come in to invest at any time.
The Ethereum ICO was the first cryptocurrency to introduce the concept of ICO to the world of digital currencies. The team behind the ICO was able to successfully raise $18 million in just 42 days. This made it the most funded ICO since the introduction of cryptocurrencies.
Another ICO you should know about is the Golem Project which raised $6.6 million in just a few minutes. With Golem being a decentralized global market built for computer power, this amount of interest in this project was not unexpected. Other ICOs you might have heard of include Lisk, Waves, ICONOMI, and so on.
Ever since the first token sales appeared in 2013 and seven projects raised more than $30 million, the amount of token issuances has skyrocketed with three years. In 2017, about 342 ICO’s raised more than $5.4 billion. Due to the intense activity in ICO, concerns have been raised from many quarters regarding the legality of token sales.
Over the next few years, regulatory bodies will continue to pay more attention to ICOs and possibly pass blanket laws or amend existing ones to ensure investors are not being cheated out of their money due to fraudulent activities.
Blockchain Watching will continue to give you information on the latest developments in cryptocurrencies and blockchain project funding. But that’s not all. On this page, we can also help you in promoting your ICO so that you can reach a wider audience and have as much funding as you need.
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