Initial coin offerings and crypto-assets
Broadly speaking an initial coin offering (ICO) is the cryptocurrency industry’s equivalent to an initial public offering (IPO). A company looking to raise money to create a new coin, app, or service launches an ICO as a way to raise funds.
Interested investors can buy into the offering and receive a new cryptocurrency token issued by the company. This token may have some utility in using the product or service the company is offering, or it may just represent a stake in the company or project.
That is:
- Initial Coin Offerings (ICOs) are a popular fundraising method used primarily by startups wishing to offer products and services, usually related to the cryptocurrency and blockchain space.
- ICOs are similar to stocks, but they sometimes have utility for a software service or product offered.
- Some ICOs have yielded massive returns for investors. Numerous others have turned out to be fraud or have failed or performed poorly.
- To participate in an ICO, you will usually need to purchase a digital currency first and have a basic understanding of how to use cryptocurrency wallets and exchanges.
- ICOs are, for the most part, completely unregulated, so investors must exercise a high degree of caution and diligence when researching and investing in ICOs.
This space is regulated and covered by many layers of complex lawyers. This blog is not legal advice but rather only information if you want legal advice please talk to our friends at AR LAW SERVICES: Specialist Blockchain Lawyers. www.arlaw.com.au
