What are ICOs (Initial Coin Offerings) and how do they work?

An Initial Coin Offering (ICO) is a method of fundraising for cryptocurrency projects, where new tokens are sold to investors in exchange for established cryptocurrencies like Bitcoin or Ethereum. ICOs function similarly to an Initial Public Offering (IPO) in the stock market, but instead of company shares, investors purchase digital tokens that may represent a stake in a new blockchain-based project or platform. The tokens sold during an ICO are often used for access to the platform’s services, rewards, or governance. ICOs have become a popular way to raise capital for blockchain startups, but they also carry significant risk, as the projects may not deliver on their promises, and they are often unregulated.