What is Initial Coin Offerings(ICOs)?
Initial Coin Offerings(ICOs) is an unregulated and controversial means of crowdfunding via the use of cryptocurrency, which can be a source of capital for startup companies. In an ICO a percentage of the newly issued cryptocurrency is sold to investors in exchange for legal tender or other cryptocurrencies such as Bitcoin. The term may be analogous with 'token sale' or crowdsale, which refers to a method of selling participation in an economy, giving investors access to the features of a particular project starting at a later date.
ICOs may sell a right of ownership or royalties to a project. The coin in an ICO is a symbol of ownership interest in an enterprise - a digital stock certificate, if you will. In contrast to initial public offerings (IPOs), where investors gain shares in the ownership of the company, for ICOs the investors buy coins of the company, which can appreciate in value if the business is successful. At least 400 ICOs have been conducted as of August 2017. Ethereum is (as of August 2017) the leading blockchain platform for ICOs with more than 50% market share. The Ethereum network ICOs have resulted in considerable phishing, Ponzi schemes, and other scams, accounting for about 10% of ICOs.
One of the first "mainstream" ICOs was executed by the messaging app developer Kik in September 2017. Kik had previously issued $50 million in tokens called "Kin" to institutional investors and sought to raise an additional $125 million from the public. In connection with this ICO, an unidentified third party executed a phishing scam by circulating a fake URL for the offering on social media.