ICO (Initial Coin Offering)

ICO stands for Initial Coin Offering. It is a fundraising method (crowdfunding) used by new projects in the cryptocurrency space. During an ICO, a project sells its newly created digital tokens or coins to early investors in exchange for established cryptocurrencies, like Bitcoin or Ethereum, or sometimes for fiat currencies (e.g., US dollars). For startups, it is a way to bypass the traditional and regulated fundraising processes involving banks or venture capital investors.

Although the name is reminiscent of an Initial Public Offering (IPO), there are fundamental differences. Unlike an IPO, an investor in an ICO typically does not acquire an ownership stake (equity) in the company. Instead, they receive digital tokens that may have future utility within the project or can be traded speculatively. The ICO market is largely unregulated, which, in the past, especially during the 2017-2018 boom, led to a significant risk of scams and low-quality projects. Therefore, investing in an ICO is considered highly speculative.