<p>An Initial Coin offering, also normally spoken as an ICO, could be a fundraising procedure within which new operation sell their crypto tokens in exchange for bitcoin and ether. It's somewhat the same as an Initial Public offering within which investors purchase shares of an organization.</p>

<p>In ICO, companies sold new digital assets to the investors and most of the time they called it "token sale", “ICOs” or "crowdsale". Actually, the process of ICO is almost like IPO (Initial Public Offerings), but instead of buying the shares of the company, investors buy digital "tokens" or Their ICOs (new cryptocurrency coins) believing the value of those coins will rise in the future.</p>

CC BY-SA 3.0
2018-03-22T12:15:36.310Z
2018-03-22T12:15:36.310Z
rickeyroy
<p>Cryptocurrencies, and by extension issued tokens, live in a legal grey zone.</p>

<p>ICOs are just a means to use blockchain-issued tokens as a funding mechanism. If it weren't for the legal grey area, it seems to me that they're exactly the thing that investor accreditation laws are intended to prevent: raising money from people who are vulnerable to being scammed.</p>

<p>From what I've seen so far, almost every ICO is just lots of talk, without any indication that there is a plan or competence to implement anything but the off-the-shelf ICO smart contract. In other words, a modern incarnation of a pump-and-dump scam.</p>

<p>So to answer your question: the advantage is raising lots of money quickly, without needing to follow up on any promises.</p>

<p>I believe that ICOs are putting the whole ecosystem in a bad light, and are likely to result in legal problems.</p>

CC BY-SA 3.0
2017-07-11T11:36:38.183Z
I think the answer can also add/elaborate the following advantage: It is lot easier to create an ICO than the alternative of traditional regulated VC funding.
sanket1729
CC BY-SA 3.0
2017-07-11T17:44:58.743Z
@sanket1729: easier is not necessarily better.  The difficulties in obtaining "traditional regulated VC funding" might, in fact, be precisely aligned to the requirements for protecting  the market from scams.  (More likely not "precisely" ... but probably far better than the alternative under discussion here).
Jim Dennis
CC BY-SA 3.0
2017-07-12T02:16:25.547Z
I completely agree with that. Which is why I feel that the point should be included in answer. People flock to ICO over traditional funding not only because it avoid regulation/accountability(as mentioned in answer) but also because it is way easier (erc20).
sanket1729
CC BY-SA 4.0
2018-09-10T15:50:22.737Z
It is way easier exactly because it bypasses all means for buyers to guarantee rights for something real in the future. If it weren't for that fact, there would be little appeal to them I believe.
Pieter Wuille
CC BY-SA 3.0
2017-07-10T00:30:30.553Z
2017-07-10T19:32:08.737Z
2017-07-10T19:32:08.737Z
Pieter Wuille
<p>All I know about ICO is that some companies make their own coin and then those coins are bought by investors. So looks cool :) But why the companies should be happy if they will have more investors which will be buy their coins? How will companies get that money from investors?</p>

<ico-initial-coin-offering>
How does exactly ICO work? What the advantage of ICO for companies?
JavaRunner
# How does exactly ICO work? What the advantage of ICO for companies?

(Asked by: username_0 on 2017-07-06)

All I know about ICO is that some companies make their own coin and then those coins are bought by investors. So looks cool :) But why the companies should be happy if they will have more investors which will be buy their coins? How will companies get that money from investors?

**Tags:** ico-initial-coin-offering


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## 2 answers

### Answer by username_2 on 2017-07-10. Score: 12 | Accepted answer

Cryptocurrencies, and by extension issued tokens, live in a legal grey zone.

ICOs are just a means to use blockchain-issued tokens as a funding mechanism. If it weren't for the legal grey area, it seems to me that they're exactly the thing that investor accreditation laws are intended to prevent: raising money from people who are vulnerable to being scammed.

From what I've seen so far, almost every ICO is just lots of talk, without any indication that there is a plan or competence to implement anything but the off-the-shelf ICO smart contract. In other words, a modern incarnation of a pump-and-dump scam.

So to answer your question: the advantage is raising lots of money quickly, without needing to follow up on any promises.

I believe that ICOs are putting the whole ecosystem in a bad light, and are likely to result in legal problems.

> **Comments:**
> **username_3**: I think the answer can also add/elaborate the following advantage: It is lot easier to create an ICO than the alternative of traditional regulated VC funding.  
> **username_4**: @username_3: easier is not necessarily better.  The difficulties in obtaining "traditional regulated VC funding" might, in fact, be precisely aligned to the requirements for protecting  the market from scams.  (More likely not "precisely" ... but probably far better than the alternative under discussion here).  
> **username_3**: I completely agree with that. Which is why I feel that the point should be included in answer. People flock to ICO over traditional funding not only because it avoid regulation/accountability(as mentioned in answer) but also because it is way easier (erc20).  
> **username_2**: It is way easier exactly because it bypasses all means for buyers to guarantee rights for something real in the future. If it weren't for that fact, there would be little appeal to them I believe.  

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### Answer by username_1 on 2018-03-22. Score: 0

An Initial Coin offering, also normally spoken as an ICO, could be a fundraising procedure within which new operation sell their crypto tokens in exchange for bitcoin and ether. It's somewhat the same as an Initial Public offering within which investors purchase shares of an organization.

In ICO, companies sold new digital assets to the investors and most of the time they called it "token sale", “ICOs” or "crowdsale". Actually, the process of ICO is almost like IPO (Initial Public Offerings), but instead of buying the shares of the company, investors buy digital "tokens" or Their ICOs (new cryptocurrency coins) believing the value of those coins will rise in the future.


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