An initial coin offering (ICO) is a fundraising method used by startups to raise capital for new cryptocurrency projects. In an ICO, a company sells a new digital token to investors in exchange for established cryptocurrencies like Bitcoin or Ethereum. These tokens often represent a stake in the project or provide access to its services. ICOs gained popularity in the early 2010s as a way for blockchain projects to bypass traditional funding methods. However, they also carry risks, as many ICOs lack regulation and can lead to scams or failed projects, making it essential for investors to conduct thorough research before participating.