Initial Coin Offering (ICO)

An Initial Coin Offering, or ICO, is like a startup’s version of a public offering, but instead of selling shares, they’re selling new cryptocurrencies or tokens. The idea is that these tokens will be valuable in the future as the project develops. Investors buy these tokens with the hope that the project will succeed and the value of the tokens will go up, allowing them to make a profit. ICOs became wildly popular during the cryptocurrency boom in 2017, as they provided a new way for startups to raise capital quickly and for investors to get in on the ground floor of potentially lucrative projects.

However, the rush to invest in ICOs wasn’t without its risks. Because ICOs were largely unregulated at first, they became a breeding ground for scams and fraudulent projects. Many investors lost money on projects that either failed to deliver or turned out to be outright frauds. This led to a lot of scrutiny from regulatory bodies like the SEC, which began to crack down on ICOs that were essentially selling unregistered securities. The increased regulation helped clean up the space but also made it harder for new projects to launch ICOs without facing legal challenges.