Initial Coin Offerings: Are They Legal?
It seems like only yesterday -- wait, it WAS only yesterday -- we were trying to wrap our brains around cryptocurrencies like bitcoin and Ethereum.
It seems like only this morning -- wait, it WAS this morning -- we were trying to figure out what a blockchain is all about.
Now for the newest buzzword for creative finance: the initial coin offering, or ICO.
An ICO has nothing to do with an initial public offering, or IPO, although it sometimes looks like one. An ICO is the bastard stepchild of something called "project crowdfunding."
In a project crowdfunding, an individual or a company tries to raise money online to finance a project. The project can be just about anything, for example:
--An author looking for money to live on while she writes her next novel.
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--A couple looking to finance infertility treatments so they can have a baby.
--An inventor looking for funds to patent his latest creation.
Investors in project crowdfunding are not buying stock in a company. Instead, they are promised something if and when the project is completed and successful. That something can be just about anything, for example:
--An autographed copy of the novel once it is published.