Several years ago, ICOs were a way to crowdfund and distribute a new crypto currency. With your example you would sell "pre-mined" FrogCoin and there wouldn't be any real world asset that make them valuable, only speculation.
Today, most of the ICOs are made on the Ethereum blockchain, it's a way to crowdfund distributed/decentralized application and protocol. It's not about currencies anymore.
The tokens that are sold are "API keys" that will be needed to use the protocol / application.
Lots of things are good candidate to decentralisation : VPN, cloud computing, cloud storage, social media plateform, Quora, Reddit, HN, any service that make the bridge between users and take a HUGE commission : Uber, Airbnb ...
I don't know if any of these decentralized application will ever succeed but the business model / crowdunding model is evolving and in some area, like open source projects it makes lot of sense to create / use decentralized services.
So, from the token buyer's perspective, how is it different from a company that pre-sold a bunch of regular old API keys without any connection to any cryptocurrency or blockchain?
I get the trustlessness of 'smart contracts', but with tokens-as-API-keys I still have to trust that your company's products will work and that those API keys will continue to work.
Or, is the idea that the code my API key gives me access to is also defined and executed on the blockchain? That would reduce the trust I would need to have in the company pre-selling the API keys. At the same time, buying access to immutable code where functionality can't be enhanced and bugs can't be fixed is kind of lame too.
There's a much healthier secondary market for these API keys, since there's an algorithm for using your API key to grant someone else the use of your API key.
On second thought, I don't think that helps all that much, since that could just be an API endpoint on the company's server instead.
Maybe the actual benefit is just interoperability with other crypto-currencies?
I understand that I could create a FrogCoin by cloning Bitcoin or Ethereum. And then I sell investors... what exactly?
Individual coins? Are coins not mined in this scenario?
Would FrogCoin be tied to some real world asset that makes them inherently valuable and/or practical?
Or are ICOs just gambles that maybe FrogCoin will be the winning currency? It can't be that stupid? Right?