What is an ICO? Explained in plain English

IN PLAIN ENGLISH:

An ICO (Initial Coin Offering) is often referred to as a crowdsale. Rather than go through the difficult process of trying to raise funding through traditional methods, such as venture capital, startups are selling virtual coins to investors in exchange for "real" money (fiat currency). These coins, called tokens, are purchased at a low price during an ICO with the hope that they will increase in value once they become publicly traded on exchanges.

The details:

Anyone, or any company, can create their own virtual tokens. The tokens are a way of representing the stake someone has in a company, such as owning stocks.

An ICO is a mix between an IPO (Initial Public Offering) common in stocks, and crowdfunding. The difference is that IPOs are heavily regulated, and crowdfunding basically amounts to a donation. ICOs, on the other hand, are completely unregulated, and the investors putting money into them are hoping to make a return.

ICOs are becoming increasingly popular as more and more projects are raising millions of dollars in a very short period of time. The problem is the lack of regulation, and ICOs may even be illegal. A vast number of scammers are now launching ICOs only to disappear after receiving all the investors' money. Due to the fact that ICOs are funded with cryptocurrency, this helps them to remain anonymous.

Although there are inherent risks associated with ICOs, many of them are legitimate and they can represent a potential method of making a quick return. Just like any startup however, there is no guarantee that they will be successful. I don't encourage or discourage ICOs at this point, only explain what they are.