Initial coin offering (ICO) is equivalent to initial public offering (IPO) from the world of cryptocurrency. ICOs are conducted
by blockchain startups – fund raising is announced at the early stage, and then investors receive a share of the new cryptocurrency
in proportion to their respective investments. After the ICO, investors will earn if the price of that cryptocurrency rises.
And the price rises if the startup succeeds in business or if it earns from speculation on the exchange.
Why conduct an ICO and why is it popular?
The purpose of any ICO is to raise funds for a project. Investors are attracted by any opportunity to enrich themselves.
In the first half of 2017 alone, ICOs organized by startups around the world raised $180 million, which is 80% more than
for the entire 2016. Obviously, this upward trend will continue, and for now there are no signs it will stop or fall.
The boom around ICO and cryptocurrencies is very similar to the IPO boom of Internet projects in the late 90’s. Many projects
that conduct ICOs just try to make money on the emerging excitement, but there are startups, nobly using the new tool to
develop a variety of markets and technologies.
Philosophically speaking, the cryptocurrency boom is driven by the idea of information and financial anarchism that is soaring
in the air and captivating the youth. This reminds us of the popularity of 3D-printed guns!
Economically speaking, the popularity of ICO is very simple: it is an opportunity for any interesting project to attract
huge amounts of money, at the same time bypassing greedy corporations and business funds. For ordinary people, it is a
chance to earn real money from investment, bypassing exchange brokers, licenses and the taxation system.
Comparing ICO, IPO and crowdfunding
A common feature of ICO, IPO and crowdfunding is the goal. All these three events are aimed at attracting investment for
The main difference between an ICO and crowdfunding is that for you to successfully raise funds in crowdfunding on sites
like Kickstarter, you will need either already produced goods or a prototype. But with an ICO, you can attract investment
at the earliest, embryonic stage of a project.
Despite this, ICO can be considered a variety of crowdfunding, but instead of having a physical product (in fact pre-order
of goods), participants are offered to receive (to invest in) a new cryptocurrency. Participants invest money in a project,
hoping to make some dividends from it in the future: most often in the form of an opportunity to sell coins at an increased