Recently, there has been a change in the way new businesses raise money, especially when it comes to cryptocurrency. One of the most popular methods is called Initial Coin Offering(ICO). The ICO allows a project to sell its own digital token in order to raise funds and reach investors all over the world within a very short time.
Many of the cryptocurrencies you know today went through an ICO first in order to get the funding they needed. Not all coins have to go through this route, though.
An ICO is a form of digital crowdfunding where a new crypto project sells its tokens in order to raise money. This is similar to what private companies do when they want to go public. These investors choose to send funds in familiar cryptocurrencies like Bitcoin or Ethereum, or even local currency, in exchange for these tokens.
These tokens might be tradable on crypto exchanges, useful within the project's platform, or simply held by these investors in hopes that their value will grow. In other words, ICOs are a great way for coin projects to raise the funds they need without traditional banks or venture capital firms.
Because of the increase in the popularity of ICOs, they have become a great way for anyone around the world looking to get early access to participate in new coin projects. Some of the best ICOs have raised millions of dollars worth of tokens and drawn the interest of strong investors while showing early promises of becoming highly valuable in the future. A few of the most well-funded ICOs in the past include EOS, Polkadot ($145 million), and Filecoin ($257 million). Currently, the top three ICOs ongoing as of August 2025 are Bitcoin Hyper (HYPER), Maxi Doge (MAXI), and TOKEN6900 (T6900).
Most offerings usually start from a simple idea for a new crypto project. Then the team behind this project will write a white paper. This is a detailed document explaining the problem they want to solve, the purpose of their technology, how their technology works, and how the money raised will be used. White papers are very important because they help potential investors understand the project before they even decide to invest at all.
When the ICO begins, the interested investors begin to send funds to the project's official wallet address. When payment has been confirmed, they receive their tokens from the project. A good example is the EOS blockchain. They ran an ICO from 2017 to 2018 and raised $4.1 billion. According to reports, over 1 billion of their tokens were sold using Ethereum before it eventually launched. The EOS is one of the most successful ICOs in the history of ICOs.
Anyone interested in an ICO needs to first do proper research. Start by reading the project's white paper, and see if the idea makes sense and if it is feasible. Check for questionable parts and ask for help if you don't understand any part of the document. It is also advisable to run a background check on the people running the project. An ICO with a strong, experienced team is likely to increase the chances of success in the project.
The next step to take before investing is to ensure that the regulations of your country do not restrict you from investing in an ICO. A few countries, like China and South Korea, have strict laws about investing in cryptocurrency; in fact, ICOs are banned altogether. They are also not doing so well in the US because they are heavily regulated.
When you eventually decide to invest, you'll need a crypto wallet where you can safely store the tokens you'll get in exchange. Ensure that you have the right wallet address and that it is stored safely somewhere. In crypto, transactions cannot be traced or reversed if something goes wrong. Lastly, it is advisable to invest only what you can afford to lose. While every investment is a risk, it is important to part with only funds that are mainly for investments, nothing else. This is because investments like ICOs are high-risk by nature.
While ICOs offer great rewards to investors, they also come with risks. One of the biggest issues investors have with ICOs in the US is the way they are regulated, if any, depending on their structure. For this reason, some projects have tried to cut corners or reposition their ICOs as simply fundraising exercises. Some ICOs have been discovered to be frauds, while others have been accused of whitepaper plagiarism.
Another common scam is the “pump and dump”; this type of scam artificially increases token prices during the launch and then quickly falls when early investors sell off their holdings. There are also fake ICOs that use stolen photos or false team member profiles to appear genuine to investors.
Some examples of ICO scams include BitConnect, Plexcoin, Pincoin, and iFan, which was one of the biggest. Even though BitConnect happened in 2018, its effects are still felt today. Recently, Indian authorities took control of nearly $190 million tied to this scam.
However, not all ICOs are scams; in fact, a lot of successful tokens that you know today, like The Telegram Open Network, Filecoin, and even Ether, which is the native token for Ethereum, started by being ICO projects.
There are a few differences between ICOs and IPOs, although both are methods of raising funds for cryptocurrency projects. In an ICO, the investor buys a digital token, but they do not gain ownership or shares in the company. In an IPO, or Initial Public Offering, investors buy company shares and also become part owners.
IPOs are always regulated by the Securities and Exchange Commission (SEC), but not all ICOs. The SEC only regulates ICOs if they are structured and marketed as securities. This is because they are early-stage crypto projects that need funds for building their platforms, while IPOs are established businesses with products, customers, and consistent revenue.
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