The term ICO, representing Initial Coin Offering, was inspired by the stock market term IPO ( Initial Public Offering) – the listing of a new company on the stock market. The aim of IPOs is to receive funding by publicly selling company shares to investors. ICOs take a similar approach, but they don’t sell company shares, and they are not listed on the stock market. During ICOs, a company sells its native tokens to finance its projects and services. The coin offering can be beneficial for investors and the company alike. How is that possible?
Investors that believe in the potential of a project get the chance to purchase the tokens in the early stages of fundraising. ICO tokens are usually offered with significant discounts, enabling the investors to get more profit after selling the tokens sometimes in the future. The company that offers the ICO receives the needed funding to develop its startup, without major investments on their own. In this article, we will take a look at how ICO works, what lead to the rise and fall of ICOs, and what is the alternative to ICO today.
