Initial Coin Offering

Initial Coin Offerings (ICO) are a kind of crypto token sale that are used as a method of fundraising.

These are commonly associated with Initial Public Offering (IPO), in which stocks are sold to raise money for a company, though ultimately have several differences.

For example, in order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale.

Investors can purchase ICO tokens in exchange for another cryptocurrency, such as Bitcoin or Ethereum.

After a set amount of time, investors receive the tokens they purchased in the sale.

One construct that accompanies nearly every ICO has been the prevalence of a whitepaper.

A whitepaper operates as both a persuasive sales pitch and in-depth report on a specific topic, which presents a problem and provides a solution that the project seeks to solve.

Most marketers also rely on whitepapers to educate their respective audience about a particular issue.

Additionally, markets use these resources to explain and promote a particular methodology that an ICO could potentially solve.

However, the information enclosed in whitepapers have historically been met with skepticism.

ICOs Losing Popularity with Investors

ICOs have really lost their luster over the past few years. This is due in large part to the early days of ICOs, during which this practice was highly unregulated and seen as extremely risky.

As there were no regulations policing who could and could not hold an ICO, many bad actors or incompetent technologists saw the practice as an opportunity to make a lot of fast cash.

Consequently, many early investors have since lost quite a large amount of money.

Purchased tokens were either never returned to them, or the companies who issued the tokens failed within several months of the token’s official launch.

Regulators around the world have since cracked down on the practice of ICOs, which has resulted in a slightly “cleaner” space.

Unfortunately, in many cases the damage has been done, and ICOs have garnered a pretty bad reputation and are still regarded as generally untrustworthy.