A blockchain is a decentralized database, where the users of the database come to consensus about what the database contains. Blockchain technology was first envisioned in the 2008 whitepaper for Bitcoin. Since then, Bitcoin and other cryptocurrencies have experienced wide-scale use and has a market capitalization of over $200 billion today.

The full history of transactions and records are constantly maintained and updated in blockchains. Multiple users can write entries into the record of information and the community of users controls how that information is updated. If the data being stored on the blockchain is arbitrary code, this creates a global, distributed computer. The Ethereum blockchain, for example, has the capacity to store arbitrary code. The programs written on the Ethereum blockchain are called smart contracts and allow for the creation of fully decentralized applications.

A distributed database created on a blockchain allows for multiple nodes to access the database simultaneously. Each node within the network can independently update the database and see the changes everyone is making simultaneously. To illustrate blockchain technology, think of Google Documents.

Traditionally, updating a document between two different people meant that one person edited it first, then sent it to the second person to edit it again. The second person was locked out of the document because it was impossible for two people to edit the same document on two different computers at the same time. With Google Documents, however, multiple people can access and edit the same document at the same time. This is effectively how blockchain technology works today.

In the last seven years, blockchains and the various technologies and codes stored on them have formed the basis of creating multiple cryptocurrencies. These units are pieces of blockchains and are considered as currencies. They have value in the market and can be used as a medium of exchange.

An Initial Coin Offering (ICO) is a new form of crowdfunding which can be used to raise capital for start-up or early stage ventures. In an ICO, the company issues a cryptocurrency which is sold to investors in exchange for fiat currency or already established cryptocurrencies such as Bitcoin or Ethereum.

ICOs were introduced to the digital economy in 2013 with the Mastercoin token sale. Since then, the industry evolved to an extent where there were more than 700 ICOs held in a year.

Currently, ICOs and token sales generally fall under a legal grey area. With the exception of a few governments such as Malta, Singapore, China, and Japan, few countries have any formal legislation in place to regulate cryptocurrencies. The lack of regulation allowed ICOs to quickly become a popular and more efficient way to raise capital for early stage companies. However, this has also resulted in multiple been cases where investors have been defrauded solely because of that lack of a formal regulatory body. Despite this, however, ICOs remain a popular option for companies and investors alike.

As of 2019, the cloud surrounding ICO regulation is beginning to rapidly disappear. More and more countries have either stopped, or threatened to stop ICOs from taking place without some form of governmental scrutiny. In late 2018, the United States Securities and Exchange Commission acknowledged the need for formal financial regulation in the blockchain industry and introduced guidelines for issuers and investors alike. Other governments like Malta have gone further and have introduced new laws such as the Virtual Financial Assets Act to regulate ICOs, now re-branded as a Security Token Offering (STO).

If 2016 was the year where ICOs blossomed, then 2019 is the year where STOs will rise.