The initial coin offering of ICO is crowdfunding in the Web3 world. With an ICO, coins or tokens are offered for sale to fund a specific project, app or service. People can invest in the ICO and receive project coins/tokens in return.
If the money raised through the ICO cannot reach the required minimum amount, all investors will get their money back and the ICO will be reported as unsuccessful. The tokens purchased during the ICO are available at a discounted price. So if the ICO is successful and the token price goes up afterwards, first-time investors can use it to make profits.
The Ethereum ICO is often cited as the most lucrative ICO. In 2014, an Ether (ETH) token was selling for 40 cents or Rs 25.18 and is now trading at $1,065 or Rs 85,000.
If you’re curious, there are several websites where you can track active and upcoming ICOs. Some are as follows:
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ICODROP
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CoinMarketCap
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CryptoRank
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IHOLDER
The first ICO took place in 2013 with a software developer, JR Willet. He created the Omni (Mastercoin) protocol layer on top of Bitcoin, which added new functionality to the Bitcoin blockchain. To fund this idea, he solicited Bitcoin donations and even made some features of the protocol exclusive to Mastercoin holders.
You can learn more about the invention of ICO by Willet himself at the link below. It has a recorded presentation that Willet gave at the Blockchain Conference in 2017 on the invention of ICO.
Like all lucrative things, ICO comes with its own set of risks. ICOs are fairly unregulated and therefore anyone with access to the necessary technologies can start them. This lack of regulation carries a high risk of being fooled. Scammers can trick you into believing their ICO is legit and then run with your money.
In addition, ICO also has a precedent for hacking. One such example is DAO ICO, where DAO raised $150 million worth of Ethereum, but later lost a third of that amount to a hacker who exploited a bug in Ethereum code.
That’s all from I for Initial Coin Offering (ICO). If you remember any other Web3 terms that start with the letter I, please leave a comment and I’ll include them in future issues.
Until next week!
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