ICO literally stands for Initial Coin Offering. It is also sometimes called Initial Public Coin Offering. To understand what ICO means, you must understand how it works.
It is essentially a method to raises funds. However, unlike other means, this is not regulated. What are these funds for? These funds are for new cryptocurrency ventures. The initial coin offering is made use of by these newbies to forgo the tedious and over regulated process of obtaining initial capital from the centralised banks. What happens in this case is that some portion of the cryptocurrency is sold in exchange for legal tender or some other cryptocurrency. Please note that this is usually for Bitcoin.
First, a plan is created on paper with specifications such as the agenda of the project, the investment that is needed, how much can be dealt in this virtual cryptocurrency and how long this ICO campaign is likely to be undertaken for. Next, those in support of the company, buy some of the distributed crypto coins. These crypto coins are what are called tokens earlier.
Please note that in case the needed amount cannot be raised, then whatever is raised, is also returned and the entire process is termed as unsuccessful.