What is an Initial Coin Offering (ICO)


We are currently living in a world where there are over 2,000 cryptocurrencies.
Where do they all come from?
What’s the process of creating one?
Well, that’s what we’re gonna be talking about today: Initial Coin Offerings or ICOs!
What’s up cryptopeeps? It’s your girl Maria, here to deliver your daily dose of crypto news!
An Initial Coin Offering or ICO is kind of like an IPO but for cryptocurrencies.
An IPO, or Initial Public Offering, is when a corporation decides to open itself up for the public to trade its own stocks and raise funding.
In that sense, ICOs are basically a proposal to add a new coin on the market.
It’s crowdfunding for cryptocurrency, essentially.
With these ICOs, you can invest your money and get access to tokens that may potentially gain value.
If you have the technical knowledge to develop your own coin or token,
you can even initiate your own ICO to fund and start the circulation of your coin.
The first-ever ICO was held by Mastercoin back in 2013 and it was a huge success,
raising $500 worth of bitcoin in August of that year.
The goal of the coin was to add features on top of the Bitcoin network to fix issues such as Bitcoin’s instability and insecurity at the time.
Despite Mastercoin being regarded as the first,
Ethereum is, by far, the most popular coin to ever get its start on an ICO.
ICOs really started gaining popularity in 2017 as all ICOs that year raised a total of $5.6 billion.
It got even more popular the following year as ICOs raised $6.3 billion just 4 ½ months into 2018.
Fast forward to today, where there are tons of ICOs just waiting for investment.
An example of which would be the coin that Telegram is proposing as a way to exchange money in the private messaging app.
They raised over a billion dollars through accredited investors in 2018
and are expected to go on a public sale by the end of October 2019.
When investors invest in an ICO, they receive tokens in return.
Tokens are different from coins as coins like Bitcoin and Ethereum can be independent of the platform.
Tokens exist totally within the platform itself.
A token is basically a representation of something on the platform whether it be value, stake, or voting rights.
And there are two main types of tokens:
Security Tokens and Utility Tokens.
Investing in an ICO like any other investments has both its pros and cons.
Let’s start with the pros.
I mentioned earlier that investing in an ICO allows investors early access to tokens that may potentially be valuable.
When Ethereum was first launched, 1 Ether cost around 30-40 cents.
Now as of recording, it’s valued at around $218.
ICOs also give opportunities for promising projects just like Ethereum,
which became arguably the second-biggest cryptocurrency in the world.
Now the con of investing in ICOs is that it is pure speculation.
You’re banking on the idea that the potential of a token will be realized.
There’s no real indicator that’ll it’ll be a success.
Another con is that there are also ICOs that might just be scams.
If you’re looking to invest in an ICO, make sure that you do your homework.
Make sure that the people putting up the ICO are real and accountable.
I hope you learned a lot about Initial Coin Offerings in this episode.
Are you now interested in investing in an ICO?
Or maybe you’re thinking of starting one yourself?
Let us know in the comments section down below.
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And once again, my name is Maria, and this is WeTheCryptos.

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