Initial Coin Offerings – abbreviated as ICOs – are virtual token or security offerings from early stage blockchain projects. The development team usually pre-sells platform access, dividend or security tokens (or coins) during the early development phase of a blockchain service. The idea is to raise development funds and to roll out the project to the interested early adopters. Simply put an ICO is a modern cryptocurrency fundraising (crowdfunding) mechanism for blockchain startups.
Blockchain projects usually have a few things in common; they have a distributed ledger for token accounting, a limited supply of tokens and a designed platform that provides a service against the spent or owned tokens.
Initial Coin Offerings are a good chance for early contributors to support the project ideas they like, buy discounted access-to-service tokens for their own business purposes or invest into promising projects hoping the token value will increase during the development of the service.
It’s an unregulated (for now) way of raising funding for a new venture (i.e. start the business). In an ICO the startup will issue out their own cryptocurrency coin in exchange for legal tender or cryptocurrency, usually Ethereum or Bitcoin. To learn more about ICO investing check out Guide to ICO Investing and the ICO Basics Guide.