What is a token sale?
A token sale, also known as an initial coin offering (ICO), is a fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin and ether. It is similar to an Initial Public Offering (IPO) in which investors purchase shares of a company. Token sales are typically conducted by blockchain-based startups that use the funds raised from the sale to finance development of their project or platform. The tokens sold during these events can be used on the platform once it launches, giving them utility value beyond just being traded on exchanges like other cryptocurrencies.
Token sales have become increasingly popular over recent years due to their ability to raise large amounts of capital quickly and with minimal regulatory oversight compared to traditional venture capital investments. They offer investors early access into potentially lucrative projects while providing entrepreneurs with much needed funding without having to give up equity or control of their companies. However, there are risks associated with investing in token sales since they are largely unregulated and often lack transparency regarding how funds will be used after they’re raised. Investors should always do thorough research before participating in any ICOs or token sales.