An ICO is an initial coin offering. When a new cryptocurrency firm is starting up they sometimes need funding to complete the project, so this is where ICO’s come in.
Generally when a cryptocurrency firm/business/project start an ICO they will produce what is known as a ‘white paper’, this white paper generally contains the project plans including what the project will fulfil once the project is complete, how much funds are needed to complete each stage of the project, how long they expect each stage of the project to take to complete etc..
They generally release a roadmap too, this shows a projection of their targets and goals in a timeline format.
On the ICO launch generally public investors are expected to invest real money into the project, and in return the investors get ‘tokens’. These tokens are usually exchanged into the new cryptocurrency once the project is complete and the new cryptocurrency is live.
With all ICO's investors are encouraged to invest in the hope that their investment is worth more later when it launches.
For example in 2014 Ethereum used the ICO method and raised $18m+ in funds at a rate of 40c per Ether token. When Ethereum went live in 2015 the value of Ethereum was $14 per Ethereum.
In 2017 Ethereum has been worth $500+ at its high points.
Some ICO investments can be very profitable, but also a high risk of loosing funds entirely.
