The term Initial-Coin-Offering is often used in connection with crypto currency. On the one hand it is about the placement of a crypto currency on the market and on the other hand more and more companies use the ICO to obtain capital without the usual regulations.

The placement of a crypto currency on the market

The placing of the digital currency on the market is called initial coin offering or public coin offering. It is the case that a number of cryptocoins to be issued are sold to interested investors in exchange for central bank currency.

Companies use ICO to raise capital

On the part of the companies, the raising of capital is closely linked to the initial co-investment. This is the reason why the ICO is more often a form of crowdfunding. A major advantage is that companies seeking capital do not have to comply with strict regulations as is the case with the stock exchange, for example.

How does ICO work?

THE ICO has many similarities with the classic IPOs, but one important difference is that no shares are issued, but the capital-seeking company sells so-called tokens instead. These are digital coupons with very different functions. A token can, for example, be a kind of subscription right to a crypto-currency that will be issued in the future.

A clear disadvantage of ICO, however, is that companies can raise capital from this white currency without having to comply with the usual regulatory restrictions.