Overview
ICOs were the primary way for blockchain startups to raise capital between 2016 and 2018. Investors send established cryptocurrencies (usually ETH or BTC) to the project and receive the project's new tokens in return.
Process
- Whitepaper: A document outlining the project's goals, technology, and tokenomics.
- Token Sale: A period where investors can purchase tokens at a set price.
- Listing: The tokens are eventually listed on exchanges for public trading.
Evolution
Due to a lack of regulation and many scams, the popularity of ICOs declined, leading to more regulated or exchange-managed alternatives like IEOs and STOs.