“ICO” comes from “Initial Coin Offering” and it is a procedure that acts as a way to raise funds, when a company is looking to raise money to create a new cryptocurrency, application, or service.
It has the same logic with the stock IPO (Initial Public Offer) so the interested investors can buy into the offering and receive a new cryptocurrency token issued by the company. This token may have some utility in using the product or service that the company is offering, or it may just represent a stake in the company or project.
How Initial Coin Offerings work
When a cryptocurrency startup wants to raise money through ICO, it usually publishes a document called “whitepaper” which outlines what the project is about, the needed funds and what the project will fulfill upon completion.
Additionally information is presented about how many of the virtual tokens the founders will keep, what type of money will be accepted (FIAT or specific digital coins like ETH or BTC for example), and how long the ICO campaign will run for.
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