What is an initial coin offering?

An initial coin offering ( ICO) is a new crowdfunding approach used by blockchain companies. Companies usually create their own virtual currencies or tokens and sell them to the public to raise money to implement their blockchain.

What are Initial Coin Offerings (ICOs)?

Initial coin offerings (ICOs) are a popular way to raise funds for products and services usually related to cryptocurrency. ICOs are similar to initial public offerings (IPOs), but coins issued in an ICO also can have utility for a software service or product. A few ICOs have yielded returns for investors.

What is an initial supply auction?

Initial supply auction: An initial supply auction is a strategy of releasing a coin by setting a high initial price and lowering it until an active market price is achieved. Simple agreement for future tokens (SAFT): With a SAFT token, initial buyers are protected by a contract that gives the token a future use case.

How do investors buy new tokens?

Investors can generally use fiat or digital currency to buy the new tokens, and it’s increasingly common for investors to pay using other forms of crypto such as Bitcoin or Ethereum. These newly issued tokens are similar to shares of stock sold to investors during an IPO. What Happens to the Funds?