What Is an Initial Coin Offering?

Last Modified:
March 1, 2024

An initial coin offering (ICO) or crowd sale is a way for blockchain projects to raise funds by selling tokens to investors.

These tokens may be used as:

  • a form of digital currency
  • a way to invest in a project
  • access to future utilities and perks offered by the project
  • governance tokens for voting purposes

Initial coin offerings may be public (open to anyone) or private (open to selected investors).

Who can invest in an ICO?

Anyone with a crypto wallet and funds may invest in an ICO. In addition, people have different reasons for investing in an ICO; they may do so because they truly support the project or because they expect the price of the token to increase in the future.

How can you invest in an ICO?

You can find a list of ongoing and upcoming ICOs at websites like ICO Drops, CryptoTotem, or CoinMarketCap. Social media channels, such as Discord or Telegram, are also a great place to find up and coming ICOs.

List of active and upcoming ICOs

Investing in ICOs can be risky since many are unregulated and do not guarantee a return on investment. Remember to do your own research and seek expert advice before taking the risk.

What happens if the ICO is not successful?

If insufficient funds are raised, the project may be dropped by the founders. A legitimate project will return the funds to the investors. Unfortunately, because of a lack of regulation in the crypto space, many ICOs are simply scams meant to rob investors of their funds.

List of ended ICOs

What should you consider before investing in an ICO?

Before investing in an ICO, make sure to do your own research on it. Here are some things to look out for:

  • The team behind the project. Check the credibility, past history, and relevant experience of the team members.
  • The roadmap, or future plans for the project. Evaluate the team's current progress and analyze whether or not the project's objectives are realistic and attainable.
  • The whitepaper or litepaper. (Check out this guide to learn what to look for in a whitepaper.)
  • The tokenomics and total supply of tokens. Check if the total supply of the tokens will remain the same throughout the project’s lifetime or increase or decrease in the future.
  • The project’s investors and partners. Check if there are credible investors backing the project.

Remember, many scammers and hackers take advantage of ICOs to fool investors. Be wise and conduct due diligence before investing in any project. Stay safe, Ka-Bit!