First, it was digital currencies like bitcoin. Then, it was distributed ledger technologies like blockchain. Now, another potentially groundbreaking innovation from this same community of technologists has vaulted to the forefront and taken center stage—the Initial Coin Offering, or ICO.
An ICO is a decentralized method for funding digital start-up projects. Similar to crowdfunding, an ICO allows the project developers to circumvent traditional sources of initial capital, such as banks or venture capitalists. Instead, the developers raise money by issuing digital “tokens” to investors in exchange for digital currency, like bitcoin or ether. In return, the tokens typically entitle the investor to certain rights, such as the right to buy and sell goods and services offered by the project, or the right to share in the future profits of the project. A clear benefit of an ICO is that it allows project developers to tap into a vast pool of tech-savvy investors at a very early stage—sometimes when the digital product being developed is nothing more than an idea on a page.
