ICO Explained: Beginner’s Guide

If you are into investments, you might have heard about an Initial Public Offering (IPO), wherein a private corporation seeks to go public and raise capital by issuing new stocks to the public. However, there is a new term in town and it is called ICO or Initial Coin Offering. Sounds confusing right? Well, worry not, because we’re here to tell you all about this term which almost seems like a cousin of IPO. What is an Initial Coin Offering (ICO)? Initial Coin Offering is very similar to Initial Public Offering, wherein the public invests their capital in exchange for equity shares. Except, unlike in an IPO where investors exchange capital for stocks of the company, the investors receive cryptocurrency tokens for their investments. Like in an IPO, the main purpose here is to raise capital to launch a new app, coin, or service. What are the Types of Initial Coin Offerings? Typically, Initial Coin Offerings are of three types – Static Supply and Static Price – A specific funding goal is set by the Company and a fixed number of tokens are offered at a fixed price. Static Supply and Dynamic Price – The Company offers a fixed number of tokens but at a dynamic price. So, the demand of the tokens decides its price per token. Dynamic Supply and Static Price – The Company fixes the price of the token, but the demand of the token decides the total supply. How Does an ICO Work? If a company wants to launch an Initial Coin Offering, the fi...