An Initial Coin Offering (ICO) is a fundraising process undertaken by cryptocurrency projects to raise capital publicly. It involves the issuance of a new cryptocurrency token or coin to early investors and supporters in exchange for more established cryptocurrencies, such as Bitcoin or Ethereum, or even traditional fiat currency.
ICOs are conducted on blockchain platforms to ensure transparency and decentralized transactions. During an ICO, the issuing company or project outlines its objectives, roadmap, and the utility of the new cryptocurrency. These tokens usually serve a specific purpose within the project’s ecosystem, such as granting access to services, products, or special privileges.
ICOs gained significant popularity during the cryptocurrency boom of the late 2010s as a way for startups to bypass traditional venture capital fundraising and democratize investment opportunities. However, due to the lack of regulations and the potential for fraud and scams, ICOs have faced scrutiny from regulatory authorities in various countries. As a result, many projects have shifted towards more regulated fundraising methods, such as Security Token Offerings (STOs) or Initial Exchange Offerings (IEOs).