Initial Coin Offerings or ICOs are a popular way to finance cryptocurrency projects. In this event, the new cryptocurrency project will sell part of its tokens to the early birds in return for money. So, those creating these projects can use the ICOs to raise funds for their operations. They mostly use Bitcoin and such other cryptocurrencies. Before any project is done, the ICO takes place and it finances the expenses which are made by the founders for that project till it gets launched. Sometimes the ICO money may also be sent to a foundation where it is used to offer ongoing financial support to that project.
The ICOs today are being sold as software presale tokens and this is almost like giving an early access to a certain online game only to the early bird supporters. To prevent legal requirements associated with security sales, these ICOs today use terms like “crowdsale” and “donation” instead of the ICO. They also make sure that there are disclaimers to make participants aware that what they are doing is not a securities sale.
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