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Blockchain technology underpins the ICO ecosystem.

Initial coin offerings: investing's wild frontier

New -- and sometimes shady -- crowdfunding method has regulators scrambling to keep up

KEN KOYANAGI, Editor-at-large, Nikkei Asian Review | China

BANGKOK -- Initial coin offerings, the hot new online crowdfunding method, differ in many ways from initial public offerings. But both pose a similar dilemma for regulators the world over: How to create rules that are not so lax as to invite fraud, but not so stringent as to chase away money.

In an ICO, an investor purchases not ownership rights, as in an IPO, but "tokens" -- programs coded on a blockchain or a similar distributed digital ledger. These tokens can be used, say, to pay for an online service the issuer is developing, or they can serve as a "certificate" for a share of the profit the new business might generate after launch.

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