As a common way for blockchain startups to raise money outside the traditional world of venture capital, ICOs are gaining more and more attraction and attention in the mainstream.

But what exactly is an ICO? And what are the advantages? Let's break it down.

What Is an ICO?

An initial coin offering, or ICO, refers to the process by which funds are raised for a new cryptocurrency venture. As the name suggests, it is analogous to an initial public offering (IPO), in which a company offers its stock on a public stock exchange for the very first time in order to raise money. It is a means of fundraising that allows investors to purchase a cryptocurrency that will be released at some point in the future with cryptocurrencies that have a direct liquid value. In other words, an investor trades Bitcoin or ethereum for the new cryptocurrency being offered in the ICO.

The ICO almost always takes place before a project is complete. It helps the company fund the costs associated with getting the project up and running. They are typically announced on a number of different cryptocurrency forums along with key information about the project they are intended to fund, including project goals, a timeline, project development plans, the team involved, and relevant features and details of the project.

The length of an ICO will vary from company to company, though they will typically last a few weeks or so. If the ICP isn't successful and the money raised in the ICO process doesn't meet the minimum fund requirements the company set for the round of fund raising, then all of the money is returned to the investors. If the ICO is successful, then the money is used for the new venture.

Gambling ICOs

There are been a few, some of which has already successfully terminated their respective ICOs.

Bitok Dice - is an online cryptocurrency based casino with unique multiplayer games mechanics and honesty control.

BET Network - is a decentralized betting platform that aims to solve all problems around gambling world with implementation of DAPP (Distributed Applications) running over Ethereum blockchain network.

Monster Byte Inc. - is a technology company which owns a suite of gambling websites. Gamblers can wager on Sports, Blackjack, Roulette, and Baccarat.

BitDice - is an existing website that is expanding its boundaries by upgrading to the next-generation technology platform.

iMPERIUM - is a sports betting platform built on the Ethereum blockchain.

What are the advantages of an ICO?

ICOs are now commonly being used as an alternative to crowdfunding and, they allow anyone and everyone to invest. The main lure of ICOs to investors is that they stand to offer a quick and easy return on investment. The idea is that if the project is successful, the value of the cryptocurrency will increase. That means that investors who get in on the game early on will see their share of the cryptocurrency rise in value.

Smart contracts platform Ethereum, which used ethers as its cryptocurrency, is one of the first examples of a successful ICO. The company raised about $18 million in its 2014 ICO, which worked out to be about 40 cents per ether. When the project went live, the value of an ether shot up to an impressive $14, offering investors a truly staggering return on their investment. Today, a number of well-known cryptocurrencies were actually developed through ICOs, including Bitshares, Synereo, Maidsafecoin, NEM, Ethereum, NXT, Mastercoin, DigixDAO, Lisk, Factom, and Waves.

What about the disadvantages?

The main downside to ICOs is that they aren't regulated. Because ICOs aren't regulated or registered with any kind of government organization, there aren't any investor protections other than what the company itself offers. As ICOs continue to become more popular, their unregulated nature is increasingly attracting scrutiny. For example, the Financial Times and the Economist have criticized the process for its lack of regulation in recent months.

"As with any boom, there are bad actors to be found in the land of ICOs. Given Bitcoin and the larger cryptocurrency world's deep tradition of enduring bad behavior, it is not a surprise that ICOs are attracting humans of base intent," Alex Wilhelm explained in Tech Crunch.¹ "In the world of ICOs, fraud is never hard to find. Add in regular sums of incompetence that any new venture could fall prey to, and ICOs feel a bit Old West."

Given the lack of regulation, novice investors or those who are particularly knowledgeable about cryptocurrencies are particularly susceptible to be taken advantage of. But the good news is that the issue continues to attract attention, and governments are increasingly exploring ways to regulate ICOs and cryptocurrencies as a whole.

Should I put money into an ICO?

The bottom line is that a smart investment in an ICO can yield a pretty significant return. However, that doesn't mean you should dive straight into an ICO. It is important to note that buying into an ICO does carry some pretty significant risks, so you should only invest if you have a high-risk appetite and are willing to potentially permanently part with the money you've invested. But if you do have an interest in high risk, high reward investment options, you might want to consider giving an ICO a go.

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1) TechCrunch. WTF is an ICO?
https://techcrunch.com/2017/05/23/wtf-is-an-ico/