A few days ago, a startup called Bancor raised around $153 million in two hours and twenty-five minutes.

The ICO, short for initial coin offering, followed several similar, equally successful funding events, and the numbers are rising. Prediction market Augur raised around $5.2 million over two months in 2015; this year, its competitor Gnosis raised $12 million in just 15 minutes.

And we could only be getting started.

The initial coin offering (sometimes also called a token crowdsale) is, in certain ways, similar to an initial public offering. Instead of stock, in an ICO a company sells a number of cryptocurrency tokens.

Every ICO is a little bit different, but typically there's a time limit for the sale, and a set number of maximum tokens that will be sold. Once those limits are reached, the sale is done, and the owners can use their tokens as they please.

Tokens are different from shares, though. They can be traded and they have a value, and after a successful ICO this value can easily double. Again, this is similar to an IPO; those who get in early usually benefit from the initial spike in value.

But tokens don't typically give their owners ownership over a part of the company that issued them. Each token is, in fact, a smart contract that can provide additional benefits down the road. For example, the tokens issued by Storj — a decentralized storage solution — can be exchanged for storage space on the platform. If you're wondering, Storj's ICO was also successful; the company easily raised $30 million in May 2017. And Bancor's tokens are a type of monetary reserve that provide liquidity to other tokens; per the project's FAQ, an increase of value of other tokens on the Bancor network should increase the value of the Bancor token as well.

It all revolves around Ethereum

So how do you get in on the action? First, you need to get some ETH, or Ethereum. That's because Ethereum is more than a cryptocurrency, it's a platform for smart contracts that makes ICOs easier to do (although, theoretically, you can have a token sale on a different platform; for example, Ethereum itself had a Bitcoin-based token sale in 2014, raising $18 million). Thanks to this, most ICOs these days are Ethereum-based, and to participate in the sale, you typically need to exchange your ETH for tokens.

Buying ETH isn't particularly complicated; you can do so on exchanges such as Kraken or Coinbase. Then, during an ICO, you usually just have to send ETH to a designated address — though other rules may apply, so always read the terms of every ICO very carefully before participating.

If everything went OK, you will receive the new tokens soon, usually within a week. You can choose to keep them or trade them back into ETH at any point; a lot of ICO participants quickly "flip" the tokens back into ETH, especially if the tokens quickly gain value compared to the ICO price.

Wait. It's not that easy.

But that's all theory. Actually participating in an ICO is next to impossible; trust me, I've tried. This is because every ICO — as confirmed by Ethereum Foundation member Vlad Zamfir — is a huge strain on the Ethereum network, as thousands of buyers try to participate all at once. This means that transactions during an ICO will go through slowly, and similar to trying to buy a ticket for the Super Bowl online, your efforts might be in vain.

There is a whole lot of /r/bitcoin style "this is good news" ITT... imo yes, it is a huge issue!https://t.co/Hi46zzPTxE — Vlad Zamfir (@VladZamfir) June 13, 2017

There are also various tricks big players can employ to buy tokens before others; some companies are undertaking measures to make the playing field more even, with mixed success.

Finally, ICOs aren't regulated. A company that sets out to do an ICO will post some rules on a website, and that's pretty much all you have in terms of regulations. Guarantees that you won't lose your ETH are feeble, and even the name of a known figure from the cryptocurrency world, like Ethereum co-founder Vitalik Buterin, doesn't mean much — as recently explained by the man himself.

1. This is me socially precommitting that I will not be an advisor for future ICO projects. — Vitalik Buterin (@VitalikButerin) June 13, 2017

5. Most existing projects that listed me as an advisor never paid me a cent for it. — Vitalik Buterin (@VitalikButerin) June 13, 2017

The result of these issues is that it will be hard for a small player to participate in an ICO. Again, this is similar to many IPOs, where the majority of available shares are pre-sold to banks and funds. The difference is that here, the barriers to entry are mostly technical, not political.

Finally, disasters happen. Big ones. The crowdsale of decentralized VC fund DAO was one of the largest in history, but someone exploited a bug in the code to steal a big chunk of the raised funds. To fix this, Ethereum forked into a new software version, restoring the funds, but the incident led to a big drop in Ethereum's price.

So when will this bubble burst?

Despite the issues outlined above, the ICO craze currently looks and feels like a bubble. Tiny, unknown startups which barely have a functional product are raising tens of millions of dollars within hours. By amassing big amounts of ETH, which (typically) stays outside the market for a while, every ICO is driving the price of ETH upwards. And the price of ETH is already up some 3500% compared to last year.

Here's how this may look from one user's perspective. Say you bought 10 ETH in 2016 for a meager hundred bucks. Today, your 10 ETH are worth around $3,500. But say that instead of doing nothing with your ETH, you invested half of it in the Gnosis ICO this April. The price of GNO tokens more than doubled within hours of trading. If you sold those for ETH right away, you'd have roughly 15 ETH, which today would be worth $5,250. This scenario, while theoretical, isn't uncommon; in fact, with the growth Ethereum has experienced in the last year, gains such as these were easy to achieve.

Sounds crazy? A little bit like building a Jenga tower? That's because it is. There are currently few people who think this kind of growth is sustainable; and many point out that some sort of correction is necessary.

There's no "cure" for bubbles except to let them run their course and pop, unfortunately. — Vitalik Buterin (@VitalikButerin) June 13, 2017

Charles Hayter, CEO of CryptoCompare, told Mashable via email that some of the ICO valuations we're seeing are "removed from reality and certainly don't include a realistic assessment of probability of failure."

For some, this will end badly. "The wealth of the space is being driven by greed which attracts more than its fair share of charlatan - but there is opportunity, too. Money for nothing will lead to dire straits for some," Hayter said.

On the other hand, the space and possibilities that Ethereum has opened are expanding rapidly. Take Bancor, for example; currently the top dog in terms of money raised via a token sale.

Built on top of Ethereum, Bancor is a platform in itself, allowing easy generation of new tokens to users without the need of extensive technical knowledge, and providing liquidity to seldom-used tokens. The way it all works is complex stuff, and yet raising $153 million seemed easy. Bancor, however, is largely unfazed by the enormous success of their crowdfunding effort.

"Bancor stands in the category of Ethereum as a landscape-shaping product," Galia Benartzi, Chief Business Officer at Bancor, told Mashable in a phone interview. "When the product launches live, and anyone in the world has easy access to creating a smart token, this will change the face of cryptocurrency adoption. We’re very excited in unlocking the power of the long tail."

While extremely ambitious, Bancor is just one of hundreds of startups built on top of Ethereum, and you'll hear similarly audacious words from others as well. And many of these upcoming startups have ICOs, or token crowdsale events, lined up in the near future. Long-term, the success or failure of this new breed of apps will likely determine the fate of Ethereum. But right now, despite the big numbers that often don't make sense, the crypto crowd can't wait for the next ICO to begin.

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.