ICO (Initial Coin Offer) is the term used to define a process of raising funding for
some particular project. Only instead of traditional shares, the participants get coins
for their contribution — certain electronic tokens (blockchain entries), confirming the
investor’s stake in the project and consequently the investor’s share in the profit from
the project. In other words, A-coins are issued for Project A, B-coins are issued for
Project B, and so on. Coins, have value only within the scope of a certain project. So,
coins for Project A do not affect coins for Project B.
ICOs bring the following advantages to contributors over equity holdings:
- Transparency of use of funds, an escrow can
be used to verify how the funds are being spent after the ICO
- Early contributors will have more liquidity
in early stage companies
- Early access to a token which has the
potential for rapid capital growth
- Not regulated or registered with any
government organisation
- An innovative way to deploy capital that
offers a hedge against political and economic shocks
- An ICO which uses existing networks such as
Stratis, Ardor and Ethereum, are tapping into the network capital of an existing
ecosystem
- Contributors are usually the first users of
the token – thus unlike holding a stock of a company whose products a
contributor never used, ironically tokens can be more tangible than securities
- The returns from investing in ICOs can be in
the 1000%, with the profits from the hits outweighing the losses of the misses
- Portfolio diversification
- A high risk, high reward asset which is (to
some extent) disconnected from the stock market and the economy
- Owning an alternative asset not based on
FIAT (state regulated) currency
