Explain the Concept of ‘Initial Coin Offering’ (ICO).
An Initial Coin Offering (ICO) is a fundraising method used by cryptocurrency startups to raise capital. In an ICO, a company sells a new cryptocurrency token to early investors in exchange for established cryptocurrencies like Bitcoin or Ether.
It is analogous to an Initial Public Offering (IPO) in traditional finance, but without the stringent regulatory requirements. ICOs were a popular, but often risky, way for projects to bootstrap development and create a community.
Glossar
Initial Public Offering
Legitimacy ⎊ A formal listing process, whether a traditional IPO or a regulated Direct Listing, confers a degree of market legitimacy upon the issuing entity or asset.
Initial Coin Offering (ICO)
Issuance ⎊ An Initial Coin Offering (ICO) is a method of digital asset Issuance where a project raises capital by selling a new cryptocurrency or token to early investors, typically in exchange for established cryptocurrencies like Bitcoin or Ether.