"Initial Coin Offerings" are all the rage these days. A project called Bancor raised $153 million within a handful of hours. This week, another called Status.im raised at least $64 million. Both evoked so much enthusiasm that transactions clogged up the underlying network. The startup behind chat app Kik is planning an ICO sometime this year. According to a recent CoinDesk report, "So far in 2017, blockchain entrepreneurs have raised $327m through ICO offerings, a figure that now exceeds the $295m raised through VC funding."

As the name implies, ICOs are inspired by standard IPOs, although in practice they are very different. The simplest way to understand an ICO is that it consists of crowdfunding on top of a blockchain (the technology behind Bitcoin). Investors buy tokens -- units of digital currency -- which are typically meant to be an integral part of the application that the startup wants to build. The bet is that the application will be popular and thereby generate demand for the tokens, increasing their value. So far, most ICOs are built on top of Ethereum, which is like a version of Bitcoin that can also host applications called "smart contracts."

There is big money here, much of it coming from China. But plenty of investors from all over the world want to get in on the ground floor, hoping to become a stakeholder in a startup that could turn out to be the next Google or Facebook. Meanwhile, critics say that ICOs are schemes to evade SEC regulation, or that ICOs have potential but the current fervor is a bubble.

Let's get to the real question: Should you invest? Is this a good way to get rich quick? In the case of most ICOs, the answer is no, but contrary to Betteridge's Law, there are occasions when the answer is yes. As with all high-return investments, buying cryptocurrency is risky, and ICOs are riskier still. And as with all active investments in general, it is wise to never commit more money than you can afford to lose.

That said, if 1) a project makes sense as a business and 2) there is demonstrated demand for it, and 3) the business is something that needs a cryptocurrency token system to work, and 4) you can commit the funds without hardship, then sure, go ahead. Alternately, if you know that you are a talented speculator irrespective of an asset's underlying value. (However, this is probably not true even if you think it is. Even most professional stock traders don't beat the market.)

That said, it is crucial to understand that buying into an ICO is not the same as buying stock. When you buy stock, you literally buy a piece of the company. Similarly, stock is regulated and obligations like fiduciary duty and accreditation are involved. Legal infrastructure may come to cryptocurrencies eventually, but we are not there yet.

Rather, as Investopedia plainly put it: "Early investors in the operation are usually motivated to buy the cryptocoins in the hope that the plan becomes successful after it launches which could translate to a higher cryptocoin value than what they purchased it for before the project was initiated."

On top of that, a typical ICO company has a website and a whitepaper, but no functional product. The consensus in the venture capital world is that it's not good for a new startup to get too much money too quickly. The founders will feel compelled to spend the funds simply because they're there, and abundant resources will reduce the need to hustle hard for product-market fit.

Neither is Ethereum itself a stable store of value. A flash-crash shook the market on Wednesday. Prominent Ethereum developer Vlad Zamfir? said in March, "Ethereum isn't safe or scalable. It is immature experimental tech. Don't rely on it for mission critical apps unless absolutely necessary!" It is worth stressing that ICOs, which usually rely on Ethereum, are themselves an experimental mechanism.

In closing: You might be able to make money by investing in ICOs. But there are substantial risks involved and you should try to approximate the due diligence that a traditional investor would conduct before committing cash to a new project.