What are “initial coin offerings” (ICO)?

1. An Initial Coin Offering (ICO) is a form of crowdfunding that uses cryptocurrencies or tokens to secure the funds.

2. Investors contribute money by buying a certain amount of cryptocurrency or token, and receive a useable product or service in exchange.

3. ICOs are similar to initial public offerings (IPOs). However, instead of issuing stocks, companies issue coins or tokens.

4. The tokens issued in an ICO have various uses and values, depending on the project in which they are issued for.

5. Some tokens are used to provide access to services, while others represent ownership in a company and give holders the right to vote on important decisions.

6. ICOs generally have no regulation, although some have moved towards regulation with the help of regulatory bodies such as the SEC.

7. Investors should be aware of potential risks associated with ICOs.

8. These include lack of regulation, poor due diligence, investor confidence issues, fraud and lack of liquidity.