An ICO (Initial Coin Offering) is a fundraising mechanism in which new cryptocurrency projects sell their tokens to early investors in exchange for established cryptocurrencies like Bitcoin or Ethereum, or sometimes fiat currency.
How ICOs Work
A project publishes a whitepaper describing its technology, team, tokenomics, and roadmap. Interested investors send cryptocurrency to a smart contract address and receive the new project's tokens in return, often at a discounted price.
History
The ICO boom peaked in 2017-2018, raising billions of dollars for new projects. While some ICO projects like Ethereum became enormously successful, many turned out to be scams or failures, leading to significant regulatory scrutiny.
Modern Alternatives
IDO (Initial DEX Offering): Token sale conducted on a decentralized exchange.
IEO (Initial Exchange Offering): Token sale hosted by a centralized exchange.
Launchpads: Platforms that vet projects and facilitate token sales (e.g., Binance Launchpad).