An unregulated means by which funds are raised for a new cryptocurrency venture. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for Bitcoin or Ethereum.
Also called an Initial Public Coin Offering (IPCO).
Why It’s Interesting
Most of us that have been in crypto for a while have coins mooning (explosive increase in value) in a short while. We’ve all thought “I wish I had bought that coin at $0.01 before it went to $2 or that $3 coin that went to $20”. But it’s impossible to know beforehand whether a coin will moon or not.
ICOs do give us a better chance at this, while also backing technology or ideas that we believe it.
For example Ethos (formerly called BQX) had a cost at ICO of $0.03 and is now trading at ~$10. That is an increase of over 300 times! Had you invested $100 it would be worth $30,00 today. Now that is enough to get us well into “I’m interested” territory right!
Buying into an ICO gives you access to coins before they are released to the public for trading. This can mean you get a certain crypto coin for a really good price and just HODL until you retire (exaggeration but you get my drift).
However! Just like IPOs and other crowdfunding techniques an ICO can also mean a loss of money. You could for example buy into an ICO where the price would be about $2 per coin. But a few weeks or so later they go public and everyone can buy/sell these coins, suddenly the market realizes that this company and it’s coin is worthless and you might not even be able to liquidate your initial investment at all, just holding a digital coin that is literally worthless ($0).
Like everything when it comes to investing, you have to do your research and try and understand why and how a company and its coins will and can work. But if you see an ICO that looks promising and you believe in what the company is doing then that is a perfect opportunity to get in and invest in an ICO!
Where do I invest and how do I actually buy an ICO?
Now this might not be the easiest to understand if you’re new to the crypto world. But an ICO and it’s coins aren’t listed on any exchanges and you can only buy them from the company itself.
Many companies use a system where on their website it states some ratios, for example:
- 1 ETH = 1,000 NewCoin
- 1 BTC = 15,000 NewCoin
Given this information you can then send an amount of ETH/BTC to the company’s wallet and in return they will give you however many coins you purchased.
Where do I find ICOs?
A great place to look for ICOs is the github repo “Ultimate ICO Calendar” .
A newer one is ICOAlert.