What is an ICO: new coins is coming
What is an ICO? A new form of investment
A simple explanation
What is an ICO? An ICO is a process with which a company, generally a startup of a new decentralized service, offers some tokens to investors, with the purpose of raising capitals by a crowdfunding.
The same concept is applied in the market by an IPO (Initial public offering) with which a company sells its shares to collect capitals.
Why is it called “Token”? Token coins or trade tokens are coin-like objects used instead of coins. The difference between a token and a coin is that a coin is issued by a governmental authority, instead a token has a much more limited use and can be issued by a private company, group, association or individual. When the token is issued by a company, but also recognized by the state, there is a convergence between tokens and currency.
How does they work?
Basically, it’s a ‘token sale’ or crowdsale, with the purpose of selling the participation in an economy, giving investors access to the features of a particular project that will start in a later phase. ICOs may sell a right of ownership or royalties to a project. To purchase the tokens you need to send to the ICO an amount of Bitcoin, Ethereum, US dollars or any other coins requested. Generally the offer is divided into phases, the first stages guarantee a much higher percentage of tokens sold.
A brief history
The first ICOs were launched to raise money for new cryptocurrencies, but the current ICOs are used for any purpose. Generally, tokens are sold to collect money, with the existence of tokens and their behavior defined by mathematical algorithms. Unlike what happens in the similar IPO, the acquisition of tokens is not regulated by the government and may not guarantee ownership or other rights.
The first ICO was made in 2013 for the launch of the Mastercoin cryptocurrency. In 2014, the cryptocurrency Ethereum collected money with an ICO. Today ICOs are very famous. From May 2017, there are about 20 offers a month. There are at least 18 websites that track ICOs, you can find one of them at CoinTelegraph.
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