Initial Token Offerings - Five Things That You Need To Know About Them

Initial token offerings (ITOs), also called initial coin offerings (ICOs), token launches or token generation events, are one of the latest trends in financial services. ITOs have emerged out of the increasing use of distributed ledgers and blockchain technology, the software that underpins cryptocurrencies, such as Bitcoin.

However, are ITOs just another buzzword or fad in the Fintech sector, or are we seeing a new method of investing emerge? In this article senior associate Stephen Ozanne shares his top five things that you need to know.

1. WHAT ARE ITOs?

Tokens (or coins) are a virtual form of investment, which have been created using blockchain technology. Some start-up technology companies are "issuing" tokens as an alternative means of raising capital by using an existing blockchain platform, such as Ethereum, to create and record the distribution of tokens as a form of investment in the start-up.