ICO (Initial Coin Offering)

In the cryptocurrency industry, an ICO is equivalent to an IPO (Initial Public Offering). Companies and startup projects seeking  to raise funds for the development of a new token / coin, app, or service can fund those efforts through the launch of an ICO.

The ICO stage provides investors with an opportunity to purchase a new cryptocurrency issued by the company / startup. It is possible for the token / coin to be used in connection with a product or service offered by the company, or to serve as a stake in that company or project.

ICO fall into two categories

1) The private ICO

A limited number of investors are permitted to participate in private cryptocurrency offerings. In most cases, only invited investors may participate in a private ICO, and the amount of the minimum investment is determined by the company, likely including a whitelist.

2) The public ICO

An initial cryptocurrency offering is a form of crowdfunding that targets the general public. A public offering is a form of investing that is "democratic" as virtually anyone can become an investor.

Due to regulatory concerns, private ICOs are becoming more popular than public offerings.

ICO and IPO comparison:

An ICO is often compared to an initial public offering (IPO), which is an offering of brand-new shares in a private company. ICO and IPO are both methods of raising capital for companies.

ICO and IPO differ primarily in that IPO involve the sale of securities and are more heavily regulated. To conduct an IPO, a company must file a registration statement and obtain approval from the US Securities and Exchange Commission (SEC). A registration statement should include information regarding financial statements and potential risks.

An ICO is a sale of a cryptocurrency, not a security. Therefore, it lacks the same disclosures and formal requirements as an IPO. However, if a company attempts to circumvent these requirements by conducting an ICO for something that meets the definition of a security, it will run into difficulties with the regulators in the country in which the project is being offered.

While both ICO and IPO have their risks, IPO are more secure due to their regulation.


  • High profits
  • Accessible to anyone
  • Efficient in raising finance


  • High risk of loss
  • Unregulated
  • Not suitable for newcomers
ICO examples:
In the crypto world, ICO are extremely popular methods of raising funds. However, most of them are scams or most of them fail, but occasionally a unicorn appears.

The following are examples of successful ICO:
Ethereum (ETH)
: During the ICO held in July 2014, many crypto enthusiasts were excited about Ethereum and its programmable blockchain. ETH coin became the second largest cryptocurrency in terms of capitalization after raising 18.4 million USD in funding.

Cardano (ADA)
: Cardano aims to improve aspects of the Ethereum blockchain, and their ICO was more successful than Ethereum's. In January 2017, the company raised 62,2 million USD in funding. It does not work properly to this day (November 2022).

Here are some examples of unsuccessful ICO:
Tezos (XTZ)
: Through its ICO in July 2017, Tezos raised 232 million USD in funding. Sadly, this cannot be considered a success. The distribution of coins sold in the ICO was plagued by numerous problems and delays, which led to a class action lawsuit being filed by investors. The debt of Tezos was settled for 25 million USD with its creditors in 2020.

Dragon Coins (DRG)
: One of the most well-known examples of a failed ICO is Dragon Coins. In March 2018, they raised 320 million USD in funding. However, a series of controversies and investor speculation caused the price to drop almost immediately after the token market launch. As of 2021, the market capitalization had fallen below one million USD.

Retrospectively, Ethereum's ICO numbers were not as impressive as those of Cardano and Tezos. Although, in the altcoin crypto world, it has remained the longest and offers the most extensive ecosystem. This is due to the "ICO fever" of 2017 to 2018, and the subsequent Bull market cycles.

"ICO fevers" were similar to the "dotcom bubble," where every project that came up with an ICO was flooded with funds from greedy investors looking for profit, regardless of the risks involved.

Analyst Opinion

ICOs are often disguised IPOs from the world of finance. Due to their unregulated nature, ICOs possess both advantages and disadvantages. Investors should therefore be cautious before making any investments, lest they succumb to the allure of the super-sophisticated website, and the charismatic influencer who shills it. Crypto is a fast-paced world. It is possible for something to seem amazing one day, but not exist the next. This is the reason why it is always recommended that you conduct a thorough DYOR before making any investment.

Ondřej Tittl

Ondřej Tittl


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