Let me explain this as easy as possible:)
An ICO (Initial Coin Offering ) is a fundraising method using cryptocurrencies. Projects launching ICO are the ones that have not fully developed their blockchain platform, service, or product. The payment is usually made with BTC, ETH or fiat.
Investors take part in ICO expecting future success from the company, which will increase the underlying tokens in value.
How does ICO work?
ICOs are mainly held as a fundraising method that allows startups to raise money for their projects in very early stages.
Typically, ICO tokens follow the ERC-20 token standard, being created on the Ethereum blockchain. Along with ETH, some other platforms support the creation of tokens (like Stellar, NEM, NEO, Waves). On the contrary, some companies that have a fully functioning blockchain choose to issue their digital assets on their own platform.
Once the startup founders created their tokens, they need to make the investors support the project by participating in their ICO. It is often achieved with the development of a whitepaper that describes the project’s goals and the new ecosystem work. Founders often launch whitepaper along with a website providing more information about the project.
What is an ICO token?
The ICO token is your so-called contribution to the project investment. The more funds you give, the more tokens you get in return. Using these tokens, you will be able to either buy future company services or sell tokens.
How does ICO appear?
ICO history started in 2013 when Mastercoin (a digital currency and communications protocol) held the first ICO and raised about $5 million.
The ICO market was steadily growing since 2014 but didn’t explode until 2017–2018. In 2017 there were 875 ICOs held and over $6.2 billion was raised, which is almost 30 times more than in 2016 with $96 million collected. Still, the 2018 year was even more fruitful with more than 1200 ICOs, which resulted in $7.85 billion raised.
What are the benefits of ICO?