ICO Craze: An encryption experiment that rewrites financial history

One late night in 2017, in a cafe in Silicon Valley, two college students deployed a few lines of code to the Ethereum network using their laptops. The next morning, their cryptocurrency project posted the white paper on the official website. Within just 72 hours, investors from around the world sent $30 million worth of ETH to a unfamiliar address. This virtual cat breeding game called 'Blockchain Cats' opened the most magical chapter in human financial history with its absurd setting - the ICO golden age.

Revolution of Financing Paradigm

When traditional startups queue for months in front of Sequoia Capital to vie for roadshow opportunities, ICO (Initial Coin Offering) creates a disruptive financing model: developers do not need to give up equity, investors do not need to sign legal documents, project white papers replace business plans, and cryptocurrency wallets replace bank accounts. With the standardized support of the ERC-20 protocol on the Ethereum network, anyone can easily issue tokens like creating a social media account.

This decentralized financing model quickly ignited the market. In 2016, the global ICO financing amount was only $256 million, soaring to $6.5 billion in 2017, and surpassing $6.3 billion in the first four months of 2018. The Swiss town of Zug has gathered hundreds of ICO teams, and in hotel conference rooms, a drama of 'convincing investors in five minutes' is played out day and night. Even Nobel laureate in economics, Robert Shiller, exclaimed: 'This is the ultimate test of collective human belief.'

The symbiosis of idealism and speculative bubbles

During the craziest period of ICO, two types of projects are competing for the funding frenzy: one, like Filecoin, is trying to reconstruct the cloud storage market with token economics; the other, like Useless Ethereum Token, the founder admitted that "the token serves no purpose, purely for speculative purposes," yet raised $300,000.

Behind this absurdity lies a profound technological belief. Ethereum co-founder Gavin Wood once described, "We are building financial Legos, where every token is a composable building block." In 2017, the star project Bancor attempted to achieve automatic market making through smart contracts, raising $153 million in just 3 hours during its ICO. When the project token BNT surged by 800% on its first day of trading, on-chain data showed that over 40% of buyers came from developing countries without bank accounts — a fierce collision between technological idealism and grassroots wealth dreams.

Ecological game with hidden currents

ICO has spawned a complete industry chain.

In Mumbai and Manila, technical writers are producing declarations of 'disrupting Amazon' and 'surpassing Google' at a price of $500/page. Small exchanges are openly pricing, with 10BTC guaranteeing token listing on the first day.

The market management team creates trading volume through matched orders at on-chain addresses, drawing a perfect curve on the K-line chart.

This gray ecosystem peaked in January 2018. At the moment a South Korean project opened on the exchange, the robot program generated a trading record with a unit price of $32,000 — a 65,000-fold increase from the issue price. By the time retail investors followed suit, the big players had already harvested profits through pre-embedded sell orders.

Regulatory Iron Curtain and Industry Restructuring

In September 2017, the People's Bank of China and six other ministries jointly issued a document categorizing ICOs as "illegal public financing," leading to a 90% drop in global ICO financing within three months. The U.S. SEC successively sued Telegram ($1.7 billion ICO) and Kik ($100 million ICO), accusing them of violating securities laws. In a Southern District of New York courtroom, a judge ruled on the nature of tokens with three questions: "Do investors expect profits? Are profits derived from the efforts of others? Is there a common enterprise?" These three questions have become the Damocles' sword hanging over all ICO projects.

Under heavy regulatory pressure, the industry is beginning a process of self-purification. Compliant ICOs (SAFT agreements) now require fundraising only from qualified investors; exchanges are mandating project disclosure of team backgrounds and fund usage; audit firms are starting to track code risks in smart contracts. Developers of Ethereum, which once created the 'five-minute coin issuance myth', are now submitting legal document templates on GitHub, with comments stating: 'Line 23 of the code may trigger Regulation 5 of the Securities Act.'

The paradigm heritage reborn from the ruins

Although 90% of ICO projects have fallen silent, the legacy of this experiment is still reshaping the financial system.

The DAO incident led to the ETH community hard fork, but it validated the possibility of code governance.

STO tokenizes traditional assets on the chain, and the Tzero platform completes the first real estate tokenization transaction.

Filecoin cultivates developer ecosystem through token airdrops and establishes decentralized storage network.

In a Singapore office building, the founder of the 2017 ICO star project ICONIX is planning a new project. This time, they no longer promise to "change the world", but design tokens as game props, and users need to complete programming courses to unlock rights. "We finally understand," he pointed to the team photo during the ICO frenzy on the wall, "blockchain doesn't need to save the world, it just needs to create real value."

When the tide goes out

Looking back in 2025, the ICO frenzy is like a digital mirror of the tulip bubble in 17th century Holland. However, unlike the tulip bubble, the burst of this bubble has left behind not a mess, but the on-chain identities of tens of millions of people, infrastructure worth trillions of dollars, and a collective memory of decentralized financing. When Visa starts to settle cross-border payments with stablecoins, when Sequoia Capital launches a cryptocurrency fund, when El Salvador adopts Bitcoin as legal tender—these realities are all proving that the crazy experiment six years ago has already carved irreversible patterns in the strata of the financial system.

Just as the Internet bubble gave birth to Amazon and Google, after the ICO frenzy faded, there are more than 440,000 ERC-20 tokens active on the Ethereum network, which may eventually become the infrastructure tools of the new economic era, like pickaxes and jeans in the gold rush. And the Norwegian programmer who exchanged 1 Bitcoin for 50,000 “Blockchain Cat” tokens in 2017 is now operating the largest DeFi protocol in the outskirts of Oslo—his office wall is adorned with an abstract painting: countless code fragments reassembling in the void, ultimately piecing together the next chapter of human financial history.

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