Introduction to ICO

ICO means the initial coin offering. It is a fundraising mechanism, in which new projects sell their underlying cryptographic markers in exchange for bitcoin, ether or other cryptocurrencies. To some extent, this is similar to the initial public offering (IPO), in which investors buy shares of the company. ICO projects in the crypto-currency community are viewed as a modification of the traditional model of the venture financing or as a way to raise a large amount of capital to founders and investors. However, ICO is considered a high-risk investment, as most projects collect money for a preliminary product.
The idea is the core value of ICO. The procedure for collecting investments usually has the following stages:

• Preliminary announcement
Initiators of the project share their idea with the public in general, learn the level of the investors' interest in the project, and also answer basic questions. Announcements are held in electronic media, social networks or in the form of electronic conferences.

• Offer
It is a proposal for investment, in which the terms of the idea and the amount of tokens’ issue are announced. At this stage, preliminary closed sales of tokens can be conducted. In this way, investments are being collected for the official launch.

• Marketing campaign
At the next stage, a new project tells about its product in various electronic media, social networks, thematic portals.

• Sales start
Crowdsale or token sale implies a full-fledged launch of the tokens’ sale. While the token is not yet traded, investors have the ability to purchase it within the project platform. Later it is available on the public crypto markets. Since many projects do not reach the last stage, the release of the ICO startup token on the market is considered as a kind of proof of the project’s consistency. However, it does not mean the subsequent success of the particular token in the future.
Most projects use the smart contracts on the Ethereum platform. In such cases, investment takes place precisely in Ethereum. For example, for investments in the DANs project (decentralized advertising platform) crowdsale was conducted in Ethereum. Because of the upper limit, not all tokens were sold during the original crowding. The remaining tokens are stored at the blocked DANs address. In the future, they will be used by the team to attract advertisers during the popularity of the platform.
The return on investment occurs precisely in ETH, less often in other crypto-currencies. The potential exhaust from ICO can be 100-1000-10000 multiples in comparison with the initial investments. However, do not forget that before you invest in any project, it is worth a thorough analysis. Consequently, it will minimize the probability of a scam.