You might be hearing or reading about ICO. But what is it exactly? Well picture this out, you are starting up in Silicon Valley with some awesome ideas for new system to be used in cryptocurrency. Perhaps, you like to streamline the Parent payment system so by that, it could be encrypted and digitalized. For the meantime, let us call this BNewCoin. What seems to be the problem here is, you need investors who can give you the money and make the currency.
What an Idea?!
Now, you head over to the bank or try to get venture capitalist investors.
But what if you can raise money without giving up any shares of your company? Well, that is when ICO kicks in.
The way it works is, you make a document that details how exactly the system would work and make a professional looking site explaining why it is a good idea and why it can be useful. Then after, you ask people to send money and in exchange, you give them back with your BNewCoin. They then hope that this coin will shoot in value.
Accept the Difference
It is essential to remember that IPO or Initial Public Offering is different with ICO. Because with the latter, you’re taking risks that the currency you are holding will increase in value and make money sometime in the future.