What is an ICO?
The relentless hype around ICOs, or Initial Coin Offerings, has gripped Silicon Valley and the venture investing landscape over the past year. Similar to company’s Initial Public Offering, ICOs involve a company creating a new, unregulated digital coin at a discount to raise funds. This allows startups to avoid surrendering power in their companies to shareholders or venture capitalists. Nearly $2.3 billion has been raised to date using ICOs, Forbes reported in August. It’s been called the future of raising money.
Since Bitcoin was born in the aftermath of the financial collapse of 2008, several new cryptocurrencies have entered the fray, including Ethereum, Litecoin, the intentionally goofy Dogecoin, along with many others. Currently, the cryptocurrency market cap is worth in excess of $150 billion.
With the rapid success of these coins, and the new technology behind them, known as blockchain -- essentially a decentralized ledger -- a fresh way to invest at the very early stage of a company’s growth has emerged. Think of an ICO like a Kickstarter -- but with ICOs, you pay in with Bitcoin or Ethereum, or sometimes with legal tender, and receive tokens in the company, rather than stock. When purchasing coins in an ICO, an investor is then able to sell, trade, or hold the asset. What an investor gets out of a coin varies -- with some, the purchaser is granted access the company’s platform, or allowed to use its software, or just participate in the given project.What is an ICO?
The relentless hype around ICOs, or Initial Coin Offerings, has gripped Silicon Valley and the venture investing landscape over the past year. Similar to company’s Initial Public Offering, ICOs involve a company creating a new, unregulated digital coin at a discount to raise funds. This allows startups to avoid surrendering power in their companies to shareholders or venture capitalists. Nearly $2.3 billion has been raised to date using ICOs, Forbes reported in August. It’s been called the future of raising money.
Since Bitcoin was born in the aftermath of the financial collapse of 2008, several new cryptocurrencies have entered the fray, including Ethereum, Litecoin, the intentionally goofy Dogecoin, along with many others. Currently, the cryptocurrency market cap is worth in excess of $150 billion.
With the rapid success of these coins, and the new technology behind them, known as blockchain -- essentially a decentralized ledger -- a fresh way to invest at the very early stage of a company’s growth has emerged. Think of an ICO like a Kickstarter -- but with ICOs, you pay in with Bitcoin or Ethereum, or sometimes with legal tender, and receive tokens in the company, rather than stock. When purchasing coins in an ICO, an investor is then able to sell, trade, or hold the asset. What an investor gets out of a coin varies -- with some, the purchaser is granted access the company’s platform, or allowed to use its software, or just participate in the given project. What is an ICO?
The relentless hype around ICOs, or Initial Coin Offerings, has gripped Silicon Valley and the venture investing landscape over the past year. Similar to company’s Initial Public Offering, ICOs involve a company creating a new, unregulated digital coin at a discount to raise funds. This allows startups to avoid surrendering power in their companies to shareholders or venture capitalists. Nearly $2.3 billion has been raised to date using ICOs, Forbes reported in August. It’s been called the future of raising money.
Since Bitcoin was born in the aftermath of the financial collapse of 2008, several new cryptocurrencies have entered the fray, including Ethereum, Litecoin, the intentionally goofy Dogecoin, along with many others. Currently, the cryptocurrency market cap is worth in excess of $150 billion.
With the rapid success of these coins, and the new technology behind them, known as blockchain -- essentially a decentralized ledger -- a fresh way to invest at the very early stage of a company’s growth has emerged. Think of an ICO like a Kickstarter -- but with ICOs, you pay in with Bitcoin or Ethereum, or sometimes with legal tender, and receive tokens in the company, rather than stock. When purchasing coins in an ICO, an investor is then able to sell, trade, or hold the asset. What an investor gets out of a coin varies -- with some, the purchaser is granted access the company’s platform, or allowed to use its software, or just participate in the given project.