An ICO or Initial Coin Offering is the process by which individuals and organisations raise funds in order to launch a new cryptocurrency coin or decentralised app.
If the cryptocurrency succeeds and appreciates in value the investors make a profit.
An ICO has reached its funding goal once a “soft-cap” has been achieved. This is the minimum investment required to launch the project.
Most ICOs will also have a hard-cap. This is the maximum amount they will be willing to accept as an investment.
The term ICO is synonymous with ITO. However in literal terms, the latter refers to the sale of cryptocurrency tokens, as opposed to coins.
In their early days, ICO’s were extremely successful and predominantly crowdfunded. In fact, in 2018 alone, ICOs raised over seven billion dollars. However, due to a large number of ICOs failing to return a profit, coupled with rife fraud, in that many ICOs turned out to be scams, the ICO market turned, but it also evolved.
In today's more mature crypto market, private ICO’s have become much more common, and investor due diligence is typically much more thorough.