A Simple Introduction to ICO

What is an ICO?

  • Initial coin offering (ICO) or initial currency offering is a type of crowdfunding using cryptocurrencies
  • A company looking to raise money to create a new coin, app, or service launches an ICO as a way to raise funds
  • Interested investors can buy into the offering and receive a new cryptocurrency token issued by the company
  • This token may have some utility in using the product or service the company is offering, or it may just represent a stake in the company or project

Advantages to ICOs

  • Extremely easy to launch an ICO to create tokens
  • There are online services or tutorials that allow for the generation of cryptocurrency tokens in a few minutes
  • Low legal and regulation requirements as to traditional methods via IPOs
  • Offers investors liquidity because they can invest into the company with a few clicks but also sell off the coins just as easy

Risks to Investing in ICOs

  • Early investors in an ICO operation are usually motivated to buy tokens in the hope that the plan will succeed after it launches
  • Investors should keep this in mind when considering the differences between shares and tokens—a token does not have any intrinsic value or legal guarantees
  • The potential for high returns always come with the risk of very high likelihoods of losing everything
  • Because they are largely unregulated, ICOs are rife with fraud and scam artists looking to prey on overzealous and poorly informed investors.
  • And since they are not regulated by financial authorities like the SEC, funds that are lost due to fraud or incompetence may never be recovered

ICO vs IPOs?

  • An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance.
  • Companies must meet requirements by exchanges and the Securities and Exchange Commission (SEC) to hold an IPO.
  • Companies hire investment banks to market, gauge demand, set the IPO price and date, and more.
  • IPOs are out of reach for small businesses looking to raise money in the public market. Examples of NYSE listing standards.
  • IPO’s are a lot safer since it is regulated and a purchase in a share represents ownership in the company vs. there’s no guarantees to what is offered through the coins created from an ICO


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Ricky Young

My belief is that financial freedom cannot be obtained by just a 9-to-5, but a combination of smart investing and passive income. This is my journey to achieve financial freedom.

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