Initial Coin Offering, ICO, is a digital currency instrument used by crypto currency funded startups to raise revenues to finance their business operations and launch their business offerings.
The ICO is tied to an equity arrangement, through which shares in the form of digital currency assets are offered to investors for a stake in the company in exchange for some other capital asset such as US Dollars or a different digital currency.
An ICO is generally considered official with the release of a whitepaper detailing the business model, the market demand being served and the expected return to the investors.
Prospective investors are able to purchase the newly launched crypto currencies through a specialized exchange, Poloniex being a popular marketplace for ICOs and digital currencies.
ICO’s have drawn attention from financial industry regulators and legislatures throughout the world, struggling to catch up with the economically disruptive digital currency technologies.
In 2018, several changes affecting ICOs will dramatically change the way that the investment tool functions.
New laws across the globe will change the way that ICOs are registered, are able to promote their crypto currency offerings and their duties to investors. The most prominent worldwide trend seems to be to consider ICOs as no different from stock offerings launched through IPOs and governments are moving quickly to regulate them as such.
In 2017 more than 750 ICOs were launched raising more than $5 billion in investment dollars. Not only did it place the ICO market cap on par with many other fund generating offerings, it also exceeded the amount of venture capital that went into early stage ventures.
2018 will see more interest from traditional investors who are looking to expand their portfolios’ exposure to the high returns and commensurate risk to be had in the crypto asset marketplace.
This year will also see wider adoption in general, from the general public looking to invest in the extremely innovative and cutting edge technologies offered by these firms.