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An initial coin offering (ICO) in the world of cryptocurrency defines an event by which a community raises funds for a new cryptocurrency project. It is like the cryptocurrency version of an IPO without much of the regulation and process that accompanies similar efforts within the regulated financial world.
In an initial coin offering, the process starts with design. Startups may circulate white papers and other resources to show potential investors project details. Founders sort out what amount of a currency's virtual value will be doled out to investors.
An ICO involves a threshold of funding by which it succeeds or fails. If it fails, money is returned to its original owners.
Like other kinds of early investing, an ICO is essentially risky. ICOs, which are sometimes referred to as "crowdsales," are notorious for illustrating the principle that "ideas are cheap" and that building a successful cryptocurrency is easier said than done. Critics talk about the legality of tokens and challenges for these types of financial ventures.
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