Initial Coin Offering (ICO)
An ICO is a type of funding using cryptocurrencies, often used by startups to bypass the rigorous and regulated capital-raising process.
Lifecycle: 1. Idea & Whitepaper. 2. Token Creation. 3. Marketing. 4. Token Sale (Seed/Main). 5. Exchange Listing.
graph LR
Center["Initial Coin Offering (ICO)"]:::main
Rel_smart_contract_auditing["smart-contract-auditing"]:::related -.-> Center
click Rel_smart_contract_auditing "/terms/smart-contract-auditing"
Rel_smart_contract_specification["smart-contract-specification"]:::related -.-> Center
click Rel_smart_contract_specification "/terms/smart-contract-specification"
Rel_formal_verification_of_smart_contracts["formal-verification-of-smart-contracts"]:::related -.-> Center
click Rel_formal_verification_of_smart_contracts "/terms/formal-verification-of-smart-contracts"
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🧒 Explain Like I'm 5
An ICO is like a pre-sale for a video game that hasn't been made yet. You give the developers money now, and they give you a special '[Token](/en/terms/token)' that you can use in the game later. If the game is a big hit, your token might be worth a lot of money to other players.
🤓 Expert Deep Dive
Technically, an ICO relies on the 'ERC-20' standard on the Ethereum blockchain, allowing projects to issue tokens with just a few lines of code. The process usually involves a 'Whitepaper' detailing the technical roadmap and 'Tokenomics' (how many tokens will exist). A major regulatory shift occurred when the SEC applied the 'Howey Test', determining that most ICOs were actually 'Investment Contracts' and should have been registered as securities. This led to the rise of 'STOs' (Security Token Offerings) and 'IEOs' (Initial Exchange Offerings) where an exchange acts as a trusted middleman.