The creators of a brand-new cryptocurrency or crypto-token offer a limited number of units to investors in exchange for other major crypto coins like Bitcoin or Ethereum.
ICOs are great ways to quickly raise money for new cryptocurrencies’ development. If there is sufficient demand for the tokens offered during an ICO, they can be sold and traded on cryptocurrency exchanges.
One of the most notable successes of Initial Coin Offerings is Ethereum, and their popularity is rising right now.
A brief history of initial coin offerings Ripple was probably the first cryptocurrency to be distributed through an ICO. Around 100 billion XRP tokens were produced when Ripple Labs began developing the Ripple payment system at the beginning of 2013. To help pay for the development of Ripple’s platform, these were sold through an ICO.
Another cryptocurrency, Mastercoin, sold a few million tokens for Bitcoin during an ICO in the same year. By adding a new layer to the existing Bitcoin code, Mastercoin aimed to tokenize transactions and carry out smart contracts.
Naturally, there are other cryptocurrencies that have received funding from ICOs with success. During their Initial Coin Offering in 2016, Lisk raised approximately $5 million.
However, Ethereum’s initial coin offering (ICO), which took place in 2014, is probably the most well-known to date. The Ethereum Foundation raised nearly $20 million by selling ETH for 0.0005 Bitcoin each during their ICO. Ethereum set the stage for the next wave of Initial Coin Offerings by making use of smart contracts.
