What is an ICO?

An ICO is an acronym for Initial Coin Offering, literally Offer Initial de Tokens, which is actually an issue of cryptographic assets. This is a new way to raise funds for all kinds of projects, by selling cryptocurrency. The process is mainly used by tech startups.

Benefits of ICOs

Investors can enjoy the following benefits:

• An opportunity to get a new, low-cost cryptocurrency in hopes of getting a good return on investment (much like buying Bitcoin in 2011)
• ICO coins may come with additional benefits, such as redistribution of revenue or privileged access to project products and services.
• Ability to support projects and teams you love.

Meanwhile, token issuers get:

• Quick access to seed funding with fewer regulatory restrictions.
• Fund without loss of capital unless otherwise indicated.
• Opportunity to create and experiment with innovative decentralized business models.
• An initial user base willing to test the service.

Risks related to ICOs

It goes without saying that ICOs also involve some risk. For example, token buyers have to deal with:

• Relatively inexperienced team with no guarantee that the project will deliver on its promises.
• No regulatory protection and return guarantee.
• Limited transparency on project development and progress.
• The project risks being a complex scam or a pomp and dump scheme.

The initiators of ICOs take a risk because of:

• Uncertain regulations that may result in fines or penalties.
• An unstable investment that comes from the volatility of cryptocurrencies.
• Little information about token holders.

Brief history of ICOs

The history of ICOs begins in 2013, and it was during this year that Mastercoin launched the first ICO.

In 2017, there were 235 ICOs, five times more than in 2016. The funds accumulated in 2017 with this method amounted to 3.7 billion dollars, compared to 96 million the previous year. The biggest ICO until 2017 was Filecoin, a decentralized data warehousing network that raised no less than $257 million. You will find the list of all current and future ICOs on this site: www.coinschedule.com. This could be a good introduction to the subject.

The largest ICO to date is that of EOS, a decentralized network, which raised over $4 billion in multiple rounds in 2017 and 2018. Since the explosion of ICOs in 2017 and 2018, interest for ICOs began to decline.

How does an ICO work?

A project, or a company announces that it is going to launch an ICO by publishing what is called a White Paper. It contains the description of the project, the team developing it, the objectives, the timetable, details of the funds we hope to raise, as well as all the information allowing potential investors to make an informed decision.

In exchange for this funding, the investor receives the cryptocurrency of the project in question, commonly known as a token. Depending on the projects, these digital currencies can be acquired against other cryptocurrencies or against fiat money (dollar, euro, yen, etc.).

Most ICO tokens are issued on decentralized platforms. As of 2019, the most popular token issuance platform is Ethereum.ICOs allow startups and other companies to raise capital much more easily and quickly than by selling company shares or taking out loans, as is the case in the traditional system where you have to go through banks. or venture capitalists. Note that there is very little regulation to date in the world of ICOs. However, the more time passes, the more mature the market becomes. Thus, raising funds via ICOs will probably become increasingly difficult, as new regulations are indeed expected to appear.

Is an ICO legal?

The answer is maybe. There is no regulatory framework yet regarding ICOs, so it is a totally gray area. In the future, the process will probably be regulated. Therefore