An Initial Coin Offering (ICO) is the cryptocurrency industry's equivalent of an Initial Public Offering (IPO). ICOs function as a method of fundraising that a company that wants to raise money to create a new token, application or service initiates with an ICO. Interested investors can buy the offer and receive a new cryptocurrency token issued by the company. This token may have some benefits for using the product or service the company offers, or it may simply represent a share in a company-related project.
The ICO really caught the attention of users in July 2014. During this period, Ethereum rose to $ 18.4 million and a new era of ICO was entered.
With the success of Ethereum, ICOs have become the de facto method to fund the development of the crypto project as a token that is somehow integrated into the project.
Since 2013, ICO is often used to fund the development of new cryptocurrencies. The pre-created token can be easily sold and traded on all cryptocurrency exchanges if there is demand.
How Does an ICO Work?
When a cryptocurrency entrepreneur wants to raise money through an ICO, they usually need to calculate what the project is all about, how much money will be needed after the project is completed, how many virtual tokens the founders will hold, what kind of money will be accepted, and how long the ICO campaign will take.
During the ICO campaign, enthusiasts and supporters of the project buy some tokens of the project with digital currency. These coins are called tokens and are similar to shares of a company that are sold to investors. If the money raised does not meet the minimum funds requested by the firm, the money can be returned to the backers and the ICO will be deemed unsuccessful. If funding requirements are met within the specified time frame, the money raised will be used to achieve the project's objectives.