I have seen a lot of people asking what is an ICO. I will try to explain what it is here, and why is it so important to cryptocurrencies and to us, small investors.
ICO means Initial Coin Offering. When a company wants to capitalize, it can open an IPO (in a common stock market) or an ICO. An ICO is similar to an IPO.
In a ICO the company capitalizes through cryptocurrencies, mainly Ethereum and Bitcoin. So the company doesn't need to go the stock market any more.
The problem with IPO is that most capitalization occurs pre IPO, when only a few registred investors (whales) can buy the shares.
For years the Banks and a few elite individuals were the only ones who could invest in pre IPO. The made billions and billions, like facebook that jumped from 0 marketcap to 50 billion market before the IPO and we, small investors could invest only after those crazy gains. The same with all other nice companies, GoPro, Amazon...
Cryptocurrency, the whole satoshi vision, is revolutionary because it's empower the individuals. The true community. For the first time in history we, common people, are now able to
chose a company with a good idea, invest in its ICO, see it mature and receive our 1.000% gains. There are pre-ICOs, but they are not compared with pre IPO.
If you take a look at this website https://icodrops.com/ico-stats/ you will see that many ICO have 10x, 20x, 30x and even 50x gains (this last one is OmiseGO).
Amazing isnt it? And before cryptocurrencies only few investors had access to it! Now we have it too!
The problem is, the reward is high, so is the risky. There are many scams out there. Many ICO which were abandoned after the capitalization...
So, how to chose one?
So it's always important to take a look at whitepapers, look at team on Linkedin, look for info about the company on Reddit, telegram... there are few websites like http://icobench.com/ and https://icorating.com/ which rate ICO, so they are a good start.
