What Is Initial Coin Offering or ICO?

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Sounding similar to a IPO offer, these are yet to a degree synonymous with IPOs or initial public offers wherein companies create digital token which are then used and issued depending on the money or amount the company wishes to raise from the markets for business purposes.

What Is Initial Coin Offering or ICO?

Deemed as highly risky with no defined regulations, here is a look at some of its nitty-gritties.

In the world where digital currency is fast gaining traction not only as a investment instrument but also as a tender currency, similar to IPO offering, companies operating on the blockchain platform are highly using the way to raise money.

Unlike the usual route wherein they can raise money from angel investors or venture capital firms, they issue token with pre-defined value in the initial offer. The value for them is derived based on the demand as is the case with the IPO of companies in which a price band is set for making bids for subscription.

Being on the blockchain technology there is no formal and organized forum which needs to be informed. And individuals subscribing to it can later exchange them for tender currency or other widely popular cryptocurrencies such as the bitcoins. Also, you do not get title to the units as in with the IPO.

Though some portion by way of a stake in the underlying technology of the company or revenue or a mix of rights can be given to you upon subscription to the ICO offering.
At the same time you are not funding the concern, in fact you are making a speculative move and betting on the likely positive growth of the company issuing ICO.

There is no central bank regulating the minting of these ICOs and no go-ahead or approval is required as is to be done in case of an IPO.

ICOs in the Indian context

It is still to gain ground as India is still tuning itself with the returns the digital currency offers. Moreover, the ICOs can be subscribed to in exchange of cryptocurrencies such as etherum or bitcoins which are Indian masses do not hold in great lots as of now.

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