What is a ICO

What is an ICO?

ICO – Initial Coin Offering is an acronym that shows how funds are raised for a new cryptocurrency offering. ICO trading platforms are created for investors; they receive the unique cryptocurrency called “tokens” in exchange for their monetary investment in the business. It is a means of crowdfunding in which a digital token is created and sold to raise funds for a project’s development. These tokens are unique because they serve in funding open-source software projects that would otherwise be difficult to fund through standard methods.

The Creation of ICOs

An initial coin offering is a complex procedure that involves a thorough understanding of technology, finance, and the law.  The fundamental idea behind ICOs is to use blockchain technology’s autonomous networks in capital-raising operations to align the interests of different stakeholders. The four steps of creation an ICO are as follows:

1.     Identification of investment targets

Any ICO begins with a company’s idea to increase capital. The company determines the fundraising campaign’s target goals and prepares the necessary materials for potential investors to learn more about the company or project.

2.     Creation of tokens

The production of tokens is the next step in the initial coin offering. The tokens are blockchain representations of an item or function. The tokens are tradeable and fungible. Because the tokens are simply modifications of already existing cryptocurrencies, they should not be confused with cryptocurrencies. Tokens, unlike stocks, do not typically provide an equity stake in a corporation. Instead, the majority of the tokens provide their owners with a share in a company-created product or service. 

The tokens are created via specified blockchain platforms. Because a corporation does not have to create a new code, the process of creating tokens is relatively simple.

3.     Promotion campaign

At the same time, when implementing the previous step, usually, a company begins advertisement to involve investors. Mostly the campaigns are run online in order to reach the widest number of investors. 

4.     Initial offering                                       

In the last step, the tokens are proposed to the investors, and mainly the process of offering consists of several steps. The company can then use the proceeds from the ICO to launch a new product or service. At the same time, the investors can expect to use the acquired tokens to benefit from this product/service or wait to appreciate the tokens’ value.


Despite the fact that ICOs aren’t regulated, the Securities and Exchange Commission (SEC) can intervene. For instance, the maker of Telegram raised $1.7 billion in an ICO in 2018 and 2019, but the SEC filed an emergency action and obtained a temporary restraining order. This order was obtained due to alleged illegal activity on the part of the development team. In March 2020, the U.S. District Court for the Southern District of New York issued a preliminary injunction. After that Telegram had to return $1.2 billion to investors and pay a civil penalty of $18.5 million. 


ICOs are unique icons created and offered to investors in four thorough steps.

  1. Identification of investment targets
  2. Creation of tokens
  3. Promotion campaign
  4. Initial offering. 

ICOs are unique because they function in funding open-source software projects. These kind of projects would otherwise be difficult to fund through standard methods.

Cryptocurrency airdrop is a smart marketing strategy aimed at promoting new cryptocurrencies. This is typically done by sending small amounts of newly emerging cryptocurrencies to the members of the community. People normally receive them for free or in return for a small service. For instance, community is should share or retweet posts sent by those companies to raise awareness about the virtual coins. 

So, this is a purely promotional activity to boost the newly emerging virtual currencies that enter the market. Such actions are initiated both on the very websites of those companies and other crypto-related platforms.