An ICO (or Initial Coin Offering) is the equivalent of an IPO (Initial Public Offering) but in the world of cryptocurrency. This is an innovative fundraising method because it relies on the issuance of digital assets, called coins or tokens. The difference between these two fundraising methods? Unlike stocks, coins most of the time do not represent shares of the company. Depending on the decision of the company conducting the ICO, this digital asset may have different properties and uses. Most often, coins offer privileged rights of use of company services. Therefore, an ICO can provide an innovative alternative to crowdfunding and democratize risk capital: everyone is free to invest in the project of their choice by buying the company's coins. Once the ICO is complete, these coins can be bought and sold on cryptocurrency exchange platforms at a price dictated by the supply and demand. Thus, ICO participants hope to generate a return on their investment by reselling the coins. However, the operation is not risk-averse, as funds invested in an ICO are not guaranteed in capital return.
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