ICO: A Double-Edged Sword for Cryptocurrency Fundraising

Imagine a new project needs startup funding. Instead of seeking venture capital, they sell tokens directly to the community—that’s the core logic of an Initial Coin Offering (ICO).

The principle is simple

The project issues tokens at a fixed price, investors buy the tokens and gain assets, and the project obtains startup capital. Sounds perfect, right?

Reality is harsh

But here’s a hard truth: Most ICO projects fail. A few succeed and bring returns to investors, but the vast majority either fail to deliver on their promises or outright disappear with the funds.

During the 2017-2018 ICO boom, scam projects were rampant, with millions of dollars stolen by fraudsters. Many retail investors lost everything.

How to look at this

ICOs devolved from a revolutionary fundraising method into a high-risk trap mainly because:

• Lack of regulation, low barrier for project teams
• Information asymmetry, making it hard for retail investors to discern quality
• Too many opportunists and scammers in the mix

Conclusion: The ICO concept itself isn’t wrong; the problem lies in execution. Do your homework before investing—don’t let FOMO cloud your judgment.