ICO is one of blockchain startups' most popular fundraising methods. With it, the project team generates tokens to sell to its initial investors to receive funds to finance its development.
ICO is an acronym for Initial Coin Offering, a way to raise capital for a project by selling digital assets, the so-called tokens, based on blockchains.
Usually, an ICO is used to launch a new service or product in the crypto market. It’s very similar to an IPO (initial public offering), normally used by a new company to raise funds when it ventures into the stock market for the first time.
Simply put, an ICO is a fundraising model that startups use to finance their projects. This crowdfunding is characterized by offering money in exchange for newly issued cryptographic assets. This way, the startup receives funds, and investors receive tokens.
One of the advantages of ICOs is the project's value; the more the token gains over time, the higher the ROI (return on investment).
ICO was first introduced in 2013, and the two best-known examples are Mastercoin and Ethereum.
ICO became a real craze for years, touched the peak of its spread in 2017, and then collapsed in 2018, leaving room for other fundraising mechanisms like IEO and IDO.