What Is An Initial Coin Offering (ICO)?

Thousands of tokens have been launched with Initial Coin Offerings (ICOs).
An Initial Coin Offering (ICO) allows a project team to raise funds by selling digital tokens to early supporters. These tokens may grant holders access to specific platform features or simply allow people to speculate on the success of the project.
In this article, we’ll unpack how ICOs operate, their benefits and drawbacks, and whether they remain relevant in 2025. You’ll learn the structure behind these token sales and factors that might affect their future. By the end, you’ll have a clearer idea of what an ICO is, why organizations launch them, and what people should be aware of before investing.
What Is An Initial Coin Offering (ICO)?
An Initial Coin Offering (ICO) is a fundraising method where a company or development team offers digital tokens to the public in exchange for capital. Buyers typically acquire these tokens using major cryptocurrencies or fiat currency. The tokens can serve various purposes, such as granting access to future products or simply acting as tradeable assets on the open market.
Unlike traditional financial offerings, ICOs lack a universal regulatory framework. Some projects thrive by clearly articulating their use cases and attracting active communities. Others struggle due to insufficient transparency or poor market conditions. Over the past five years, more than half of all ICOs ended up with daily volumes under $100,000, underscoring the high-risk nature of this model.
How Initial Coin Offerings Work
ICOs typically unfold in stages. Founders of a new project introduce their plan, create tokens, run a fundraising period and then distribute tokens to buyers. The following sections will explain each step in more detail, covering core elements like whitepapers, token issuance and the timeline for contributions.