What is an ICO?

ICO = Initial coin offering.  Sometimes called a TGE (token generation event).
Coin = has it’s own blockchain.   Token = attached to a platform that has utility.

Generally, an ICO is a startup company that is trying to raise funds.
Sometimes, it’s an already established company that is moving a part of it’s product or system to blockchain technology (or they want to expand their business).
Typically, they would have to gather funds through typical investment channels.
Now, due to blockchain and smart contract tech, companies can bypass that and go straight to the community.

Basically, it is like crowdfunding or crowdsourcing with blockchain technology.

People like ICOs because you can typically get a coin for a huge discounted price.
Also, you can be an active part of an exciting new company or project.

People dislike ICOs because there are so many of them, that the quality of startups has really started to decline with many copy cats and startups that have no benefit using coins or tokens at all.
Also, there are many companies that are outright scams or near scams, where you can lose a lot of your investment.

General Advice:
Websites and youtubers that list a lot of ICO’s with reviews generally get paid to do the review so they are biased.  However, they are good starting points to do your own research.
You will most likely need an erc20 wallet to invest.  myetherwallet is one of the most popular.  You can adjust gas prices on it, so if you want the ether to go through quickly so you can get a bonus, you can do so.
Become an active part of the community surrounding an ICO.  Join their telegram, slack, or whatever they use and also frequent their ANN thread here in bitcointalk.

The most important parts of the the company to look at to determine if it is a scam or not is the development team and the whitepaper.  Take the time to look at the team’s online present and professional profiles.

To determine whether or not it will be a successful investment or not, look at the max supply of coins, how many and where they will be distributed, the soft and hard caps, the price of the coin, whether they have a working product or not, and their roadmap.

Last bit:
Most of my profit in crypto has been through ICOs.  I believe it is a great way to invest ONLY if you take the time to do some hardcore research, don’t just follow hype.


This article was posted with permission from the original author, bitcointalk.org user “chocopapaya”.

One thought on “What is an ICO?

  1. Very well put-together website that helped me (a crypto-currency newby) get into cryptocurrencies.

Comments are closed.