ICO
In short An ICO, or initial coin offering, is a public token sale where a project raises money by selling new tokens directly to buyers.
An ICO, short for initial coin offering, is a fundraising method where a project sells newly created tokens to the public before the product is finished. The name echoes an IPO, but buyers usually get no shares, no legal ownership, and few of the protections a stock offering would give.
The classic ICO worked through a smart contract or a deposit address on Ethereum. Buyers sent ETH, and the contract or team sent back ERC-20 tokens at a set rate, often with bonus tiers for early buyers and a hard cap on the total raise. Ethereum itself sold ETH in a 2014 crowdsale, and the model exploded in 2017, when many projects raised millions with little more than a whitepaper.
That boom ended badly for many buyers. A large share of ICO projects never delivered, some were outright frauds, and many tokens lost most of their value. Regulators, including the US SEC, treated a number of ICOs as unregistered securities offerings, which led to enforcement actions and pushed later projects toward private rounds, exchange-run sales, IDOs, and airdrops. The term is still used for public token sales, and many token listing sites track upcoming ones.
If you consider buying into an ICO, look past the whitepaper. Check whether the team is identifiable, what jurisdiction the sale runs in, and whether you are even allowed to participate from your country. Read the token allocation: how much goes to insiders, how much is sold, and when insider tokens unlock. A large raise for a vague product, or a sale with no clear plan for listing and liquidity, is a reason to stay away.