What are Initial Coin Offerings (ICOs)?

Initial coin offerings, also referred to as ICOs or token sales, are a way to fund cryptocurrency projects. An initial coin offering is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks.

What is an ICO & why should you invest in cryptocurrencies?

An ICO is intended to raise funds to pay for the costs incurred during a blockchain’s or coin’s development. Investing in cryptocurrencies and other initial coin offerings (ICOs) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs.

What is an ICO and how does it work?

An easy way to understand an ICO is to see it as a crowdfunding campaign. Investors send funds to projects they like and in return receive new or existing cryptocurrencies. Those new coins play a role of shares and can be traded on cryptocurrency exchanges if they are successful; however, there is no promise that investors will get anything back.

What is IPO and ICO?

An IPO is an Initial Public Offering — this is a term used when a company first releases their stock onto the stock market. Before that, the company’s stock was private and its shares were not available to the public. Hence, Initial Public Offering. It's important to understand the differences between IPO and what is an ICO.