ICO (Initial Coin Offering)

ICO, also known as initial coin (or currency) offering is a funding type that bases on cryptocurrencies. To start the ICO process, a certain amount of cryptocurrency in the form of “tokens” is sold to investors or speculators in the exchange for another cryptocurrency or a legal tender.

To better understand what ICO is, imagine the following: You’re a Silicon Valley startup. You have an awesome idea for a new cryptocurrency system. Probably you wish to streamline the Parent/Babysitter payment system so as to make it digital and encrypted. That’s great. Let’s call it PonyCoin. The only difficulty is that now you need to find people to give you money so you can make the currency. What should you do? You can try getting venture capitalist investors, but you can also raise money without giving up any of your ownership of the company. Sounds much better. That’s why you enter ICO. 

Now let’s see how it works. First, you create a document detailing exactly how the system of yours would work. It is called a white paper. Then you create a website and explain why your idea is worthy and profitable. Then, you ask people to send you money ( Bitcoin or Ether are the most common) and in return, you send them back some of your PonyCoin. The only reason why they send you money for PonyCoin is hope. They hope that PonyCoin will soon be in high circulation, which would raise the value of the currency.