An ICO (initial coin offering) is a way to raise capital: a project issues and sells tokens on a blockchain to raise funds, usually paid in cryptocurrency or fiat. It is often likened to a "token version of an IPO." This guide explains it.
How it works
In an ICO, a project issues tokens and sells them to the public in exchange for funds [1]. The tokens may grant access to a product or service, participation rights in a network, or simply function as assets traded on the market [2]. ICOs emerged in the mid-2010s as a way to raise money without traditional intermediaries like venture capital.
ICO at a glance
What to watch out for
ICOs are largely unregulated and high-risk: studies suggest a sizable share of ICOs fail to survive within months of the offering, and regulators have repeatedly warned that some ICOs are used to defraud or mislead investors [1]. Vet the project and team carefully before taking part.
The bottom line
An ICO is a way to raise money by issuing tokens, with opportunity and risk side by side and relatively weak oversight. Understanding how it works and its risks helps you view "new coin launches" more cautiously. To keep learning the fundamentals, follow more from Bitbase Academy.
Disclaimer: This article is educational content from Bitbase Academy, provided for information only. It does not constitute investment, trading, tax, or financial advice. Written as of June 2026; refer to the latest official information.
References
[1] Coinbase, "What are Initial Coin Offerings (ICOs) and how do they work?" coinbase.com
[2] The Motley Fool, "What Is an Initial Coin Offering (ICO)?" fool.com
