Some crypto-beginners might be wondering what ICO really means. ICO is a shortened term of Initial Coin Offering that is also called token pre-sale or crowd sale. ICO has some similar structures as crowdfunding and Initial Coin Offering(IPO).
Traditionally, IPO was a popular strategy for companies to collect funding, but there was a problem: the difficulty to reach the point that the companies can attempt IPO. In order to attempt IPO, the companies have to have a solid revenue, sufficient amount of capital, and time to fulfill all the complicated requirements by stock exchanges. Therefore, IPO is only available for companies which have solid foundation.
In contrast to IPO, ICO is available for start-ups as well as developed organizations. A notable characteristic of ICO is that the companies issue digital tokens or coins instead of companies’ shares, and the ICO project accept cryptocurrencies rather than the real currencies such as GBP or USD. ICO is through the internet and accessible to any projects offered in any countries.
ICO is one of the most rapidly growing ways of funding and billions of investment has been done by public. This is because there is a possibility gain huge returns. Through the investment in successful project, investors might be able to gain 100 times as much as their initial investment.
There are many disadvantages such as the possibility to join a fraud activity, so the investors have to be careful about it. However, things always consist of some risks, and the best way to define successful projects is to join ICO and train your eyes.