The words of Crypto by the Bitsapiens team.

ICO- Initial Coin Offering

ICO- Initial Coin Offering

Initial Coin Offering (ICO) is an innovative approach for raising funds through the use of digital currencies (cryptocurrencies). Such a strategy is more prevalent in cryptocurrency projects that are yet to fully developed their blockchain-based product, service, or platform. The funds collected on ICO events are normally received as Bitcoin (BTC) or Ether (ETH), but in some cases, fiat currency may also be taken as payment.

Investors often participate in Initial Coin Offerings (ICOs) with the expectation of potential success and a favorable return on investment (ROI) for being early supporters. However, ICOs differ from Initial Public Offerings (IPOs) as investors do not acquire ownership shares in the company. Instead, ICOs serve as a fundraising strategy primarily for early-stage startups in need of funds to advance their projects.

Unfortunately, the ICO space has witnessed the involvement of dubious entities that raise significant funds and subsequently disappear without any follow-up on development. Hence, it is crucial for investors to conduct thorough due diligence (also known as DYOR) before investing in cryptocurrency companies.

Various methods exist for issuing cryptocurrency tokens or coins before presenting them in ICO crowd sales. While some companies choose to build their own blockchain and issue a native coin, the majority of ICOs to date have taken place on the Ethereum network, utilizing the widely adopted ERC-20 token standard. For example, a startup may utilize smart contracts on the Ethereum network to create its own cryptocurrency as an ERC-20 token. In this case, the ERC-20 protocol establishes the rules for issuing digital tokens on the Ethereum platform, and smart contracts ensure reliable and autonomous compliance with these rules.

Although Ethereum remains the most popular choice, several other blockchain platforms support the creation and issuance of digital tokens, which can then be offered through ICOs. Stellar, NEM, NEO, Komodo, and Waves are among the platforms that facilitate ICOs.

Undoubtedly, Initial Coin Offering crowd sales provide an effective means of raising venture capital and project funding, enabling businesses and projects to obtain financial support during their early stages.