ICO is a way for cryptocurrency ERC20 Token Development firm to reach large number of investor (people) by raising a certain amount of money in the interest to grow and expand the company. This is similar to IPO where a part of company shares are sold to public for same reason. But through ICO, company solds currency like Bitcoins to their supporters called early investor and they buy in the hope to get atleast double the amount of money they had bought.
Cryptocurrency ico development companies first need to prepare a B-Plan (Business Plan) which includes the project summary, purpose of project, benefits after project completion, amount of money to be raised and minimum amount of funds that is required by the company, for how long ICO campaign would run. After the campaign starts, their supporters and other people who are interested buy some cryptocoins called as ‘tokens’. For IPO’s these tokens acts as shares of company. And then people from these suporters buy the coins for the same reason. At the end of campaign, they measure it. If the amount of money raised met the minimum amount (required by company) within specified campign time, then that money raised is used for their required purpose but if the campaign became unsuccessful then raised money is returned to the backers.
For example in 2014-15 a project was successful called as Etherum projects. This project had raised its ICO $18 million in Bitcoins i.e., $0.40 per ether. In 2016-17 this live project went upto $14 per ether i.e., over $1 billion.ICO has its own benefits. If a firm can convince people to buy currency then they can raise the money. ICO provides a way to reach more potential investor in short span of time. But the real question is why anyone would buy their currency? The answer is, like share market they gurantee that people will receive atleast double the amount of money bought.