An initial coin offering, or ICO, is a controversial fundraising method for launching blockchain and cryptocurrency networks that involves the sale and distribution of a new crypto asset in exchange for other tokens, commonly Bitcoin (BTC) and Ether (ETH).
During the “ICO mania” of 2017 to 2018, projects collectively raised billions of dollars in capital, mainly through nonaccredited investors.
This funding method has since lost most of its legitimacy inside and outside the industry. Many ICOs were frauds or, at best, operating in regulatory gray areas. Over the past few years, regulatory agencies such as the United States Securities and Exchange Commission, or SEC, have brought legal action to past and present ICOs, slowly creating legal precedents and guidelines for future ventures.
While the ICO is now a precarious fundraising method for projects and investors alike, it did showcase a robust use case of blockchain in permissionless fundraising at an incredible scale. Over time, the launch methods of cryptocurrency networks will become more sophisticated, safe, and, perhaps, regulatorily sound.
