ICO stands for Initial Coin Offering. Our ICO guide includes top tips about researching an offer, where to invest, how to invest and how to avoid scams.
Many investors entered the cryptocurrency market by investing into one of the larger, established and well known coins like Bitcoin, Ethereum and Bitcoin Cash. The Top Ten cryptocurrencies by market capitalisation show the biggest and most popular currencies.
Some sites, exchanges and applications make it relatively simple to purchase these large and well known cryptocurrencies. When investing in the more well known currencies registration is relatively quick and verification is simple.
Bitcoin is the first and most well known cryptocurrency and arguably most investors first experience of investing in a digital currency. Following the launch of Bitcoin many other cryptocurrencies were launched (such as Ethereum and Ripple). All coins other than Bitcoin are known as Altcoins. So literally an “alternative” coin to Bitcoin.
So as investors become more experienced the next investment to consider may be an ICO.
An ICO represents when the tokens or coins of a new cryptocurrency are available to own for the first time. As mentioned above, ICO stands for Initial Coin Offering, and should not be confused with an IPO (initial public offering).
What is the difference between an IPO and an ICO?
An IPO is the public sale of company securities for the first time. These securities include stocks, bonds, warrants & capital notes. the most important part of IPOs is that they are asset-backed. This means investors own a piece of the company itself.
On the other hand, an ICO is an offering of coins (digital tokens). ICOs are generally held for newer, more unproven concepts than we see in the companies that hold IPOs. In addition, IPOs are generally more exclusive, highly regulated and longer-lasting than ICOs. An ICO is a fundraising mechanism. Investors can read the plan (known as the white paper) of what the company plans to do. They can then purchase coins and if the company is successful in the longer term the value of those coins will rise.
The first ICO was held in July 2013. It was held by Mastercoin, which rebranded to Omni in January 2015.
There are several different sites where you can research and invest in ICOs. Regarding physical location, the United States treats most ICOs as IPOs, and thus restricts its residents from participating in ICOs. You should have far less trouble investing in ICOs if you’re from the United Kingdom or other crypto-friendly countries.
You can find a list of current ICO’s on our site.
Simply put, you will usually need to buy the coins using Bitcoin or Ethereum. So you will need to buy one of these crypto currencies and set up an appropriate wallet. Once this is done you can register for the ICO and then send ETH to an ICO wallet address before receiving coins from an ICO.
Since ICOs are relatively unregulated, they tend to attract lots of scammers. Other ICOs may fail not because they are scams but because the idea or business proposition didn’t work. It’s estimated that 59% of ICOs held in 2017 had already failed, or were classified as failures-in-the-making, by February 2018. ICO investing can be risky so , as always, do plenty of your own research.