What the Hell Is an Initial Coin Offering?
The ICO boom looks a lot like a bubble, but at its heart is a genuine innovation.
By Mike Orcutt
The ICO boom looks a lot like a bubble, but at its heart is a genuine innovation.
Initial coin offerings are all the rage. Dozens of companies have raised nearly $1.5 billion via the novel fundraising mechanism just this year. Celebrities from Floyd Mayweather to Paris Hilton have jumped on the hype train. But don’t feel bad if you’re still wondering: what the hell is an ICO?
The acronym probably sounds familiar, and that’s on purpose — an ICO does indeed work similarly to an initial public offering. Instead of offering shares in a company, though, a firm is instead offering digital assets called “tokens.”
A token sale is like a crowdfunding campaign, except it uses the technology behind Bitcoin to verify transactions. Oh, and tokens aren’t just stand-ins for stock — they can be set up so that instead of a share of a company, holders get services, like cloud storage space, for example. Below, we run down the increasingly popular practice of launching an ICO and its potential to upset business as we know it.
Let’s start with Bitcoin, the most popular token system. Bitcoin and other digital…
