Initial Coin Offerings ("ICOs") has
gained prominence in the world of crypto-currencies and startups as
a relatively-easy fundraising mechanism. News about raising
millions of dollars in a few seconds upon opening of the ICO is
adding to the frenzy. Many of them view ICO as a disruption to the
venture capital industry.
The nature of ICOs may lead to people equating them to both IPOs
and crowdfunding. In an IPO an investor invests in return for a
security (ownership) in a company, under highly regulated process,
which gives the investors voting rights, dividend rights etc.
In an ICO, investors transfer funds, usually in the form of
crypto-currencies, to the ICO organiser. In return they receive a
quantity of blockchain-based coins or tokens which are created and
stored in a decentralised form either on a blockchain specifically
created for the ICO or through a smart contract on a pre-existing
blockchain.
