An Initial Coin Offering is a fundraising source from crowd of cryptocurrency investors and markets. When a new currency is launched, the company needs initial funds to make it work and this is where ICO evolved.
The first ICO was by Mastercoin in 2013 which has raised approximately US$6lakh to create Bitcoin exchange.
How does it work?
There is a term called “IPO” – Initial public offerings. This term is popularly known when it comes to share market. Under IPO, companies sell their equity which is backed by tangible assets. While in case of ICOs, companies’ transfers/exchange their novel cryptocurrency which is known as Tokens. Beside this, for existing cryptocurrency, payment can be done using old-fashioned cash or often bitcoin and Ether.