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Initial coin offerings are all the rage. Dozens of companies have raised nearly $1.5 billion via the novel fundraising mechanism just this year. Celebrities from Floyd Mayweather to Paris Hilton have jumped about the hype train. But don’t feel bad if you’re still wondering: what the hell is undoubtedly an ICO?

The acronym probably sounds familiar, and that’s on purpose-an ICO truly does work similarly to a initial public offering. Instead of offering shares within a company, though, a good is instead offering digital assets called “tokens.”

A token sale is sort of a crowdfunding campaign, except it uses the technology behind Bitcoin to verify transactions. Oh, and tokens aren’t just stand-ins for stock-they may be put in place in order that rather than a share of any company, holders get services, like cloud storage area, as an example. Below, we run down the more popular then ever practice of launching an ICO and its particular potential to upset business as we know it.

Let’s start out with vtcoin, the most famous token system. Bitcoin along with other digital currencies are derived from blockchains-cryptographic ledgers that record every transaction conducted using Bitcoin tokens (see “Why Bitcoin Could Possibly Be Much Over a Currency”). Individual computers all over the world, connected via the Internet, verify each transaction using open-source software. Some of the computers, called miners, compete to solve a computationally intensive cryptographic puzzle and earn opportunities to add “blocks” of verified transactions towards the chain. For their work, the miners get tokens-bitcoins-in return.

Blockchains need miners to work, and tokens will be the economic incentive to mine. Some tokens are built in addition to new versions of Bitcoin’s blockchain that have been modified in some way-these include Litecoin and ZCash. Ethereum, a well known blockchain for companies launching ICOs, is actually a newer, separate technology from Bitcoin, whose token is called Ether. It’s even possible to build new tokens in addition to Ethereum’s blockchain.

But advocates of blockchain technology say the power of tokens goes past merely inventing new currencies from thin air. Bitcoin eliminates the need for a trusted central authority to mediate the exchange of value-a charge card company or even a central bank, say. In theory, that could be achieved for other stuff, too.

Take cloud storage, for example. Several companies are building blockchains to facilitate the peer-to-peer selling and buying of storage space, a model that could challenge conventional providers like Dropbox and Amazon. The tokens in this instance would be the way of payment for storage. A blockchain verifies the transactions between buyers and sellers and serves as a record of the legitimacy. How exactly this works depends upon the project. In Filecoin, which broke records last month by raising greater than $250 million via an ICO, miners would earn tokens by supplying storage or retrieving stored data for users.

The first ICOs to make a big splash happened in May 2016 with all the Decentralized Autonomous Organization-aka, the DAO-that has been essentially a decentralized venture fund built on Ethereum. Investors could use the DAO’s tokens to cast votes regarding how to disburse funds, and any profits were supposed to come back towards the stakeholders. Unfortunately for all involved, a hacker exploited a vulnerability in Ethereum’s design to steal tens of vast amounts in digital currency (see “$80 Million Hack Shows the risks of Programmable Money”).

Many people think ICOs can lead to new, exotic means of constructing a company. When a cloud storage outfit like Filecoin were to suddenly skyrocket in popularity, as an example, it will enrich anybody who holds or mines the token, instead of a set group of the company’s executives and employees. This is a “decentralized” enterprise, says Peter Van Valkenburgh, director of research at Coin Center, a nonprofit research and advocacy group centered on policy issues surrounding blockchain technology.

Someone needs to build the blockchain, issue the tokens, and maintain some software, though. In order to kickstart a fresh operation, entrepreneurs can pre-allocate tokens for themselves along with their developers. And so they can use ICOs to sell tokens to folks thinking about utilizing the new service if it launches, or even in speculating about the future price of the service. If the need for the tokens increases, everybody wins.

With all the hype around Bitcoin and also other cryptocurrencies, demand has been very high for a few of the tokens hitting the market lately. A little sampling from the projects that vtco1n raised millions via ICOs recently incorporates a Internet browser geared towards eliminating intermediaries in digital advertising, a decentralized prediction market, and a blockchain-based marketplace for insurers and insurance brokers.

Still, the way forward for the token marketplace is tremendously uncertain, because government regulators are still considering the way to treat it. Complicating things is some tokens will be more such as the basis of traditional buyer-seller relationships, like Filecoin, while others, such as the DAO tokens, seem similar to stocks. In July, the United states Securities and Exchange Commission said that DAO tokens were indeed securities, and that any tokens that function like securities will likely be regulated therefore. The other day, the SEC warned investors to watch out for ICO scams. In the week, China went up to now regarding ban ICOs, along with other governments could follow suit.

The scene does seem ripe for swindles and vaporware. A lot of the companies launching ICOs haven’t produced anything greater than a technical whitepaper describing an idea that could not pan out.

But Van Valkenburgh argues that it’s okay if the ICO boom is actually a bubble. Despite the silliness from the dot-com era, he says, out of it came “funding and excitement and human capital development that ultimately led to the major wave of Internet innovation” we enjoy today.