Hello awesome people, how is everyone doing today, the weekend is going on pretty smoothly and lots of excitements in the atmosphere. I hope everyone is already having a great weekend and preparing for the new week. I’m greatly excited to showcase my knowledge in this week’s topic. Really enjoying these lectures so far because I find it a great way to keep expanding my knowledge and learning new things on cryptocurrency-related topics. This week’s topic is mainly about ICO.
What is an ICO
Anyone who has been in the cryptocurrency space for a few years must have come across the term ICO because it was the major talking points few years back, in what most people called the ICO craze because different projects were popping up with ICOs right, left and center in the blockchain and cryptocurrency space. So what does ICO mean?
ICO is the short form of Initial Coin Offering which is basically a fund raising initiative - in which new and coming crypto projects who feel they have great ideas, put up a fund raising initiative to raise funds for the project, known as public funding. How this works is that, the project who feels they have a great idea and has created a great and appealing white paper and roadmap, put up an initial set amount of coins at a certain price for the fund raising (ICO) process.
ICO mostly takes place in the blockchain and cryptocurrency space and it mostly uses a cryptocurrency coin or token. A lot of the past ICOs took place on the ethereum blockchain via the ERC-20 which was considered as main foundation for ICOs. A lot of projects have had extremely successful ICOs in the past. A typical example is EOS who were extremely successful with their ICO. Once the ICO process has begun, investors who believe in the idea of the project can purchase the coins or token based on the ICO price as an investment in the project.
Difference Between ICO and IEO
ICO and IEO are two of the very popular type of cryptocurrency offerings and fund raising in the crypto space. ICO stands for Initial Coin Offering while IEO stands for Initial Exchange Offering. While both ICO and IEO are very similar in terms of what they do, they are slightly different because of where the cryptocurrency (coin or token) is offered.
|ICO - Initial Coin Offering||IEO - Initial Exchange Offering|
|Coins or tokens are offered directly to the investor||Coins or tokens are offered through an exchange that is partnering with the project that is carrying out the fund raising|
|Focuses on decentralization in the fund raising process||Focuses on centralization in the fund raising process|
|Investors have full control of their coins or tokens purchased in the ICO||Investors do not have full control of their coins or tokens since it is in custody of the partnering exchange|
|KYC is not required to participate in initial coin offerings (ICO)||KYC is required to participate in initial exchange offerings (IEO)|
|No intermediary is involved in the fund raising process||The crypto exchange serves as an intermediary in the fund raising process|
What are the Advantages and Disadvantages of ICOs?
- Fast way to raise the required funds for a cryptocurrency project with a great idea and white paper.
- Decentralized method of fund raising because investors have full control of their coin or token and are stored safely in their wallets.
- Investors who participate in ICO can make huge gains when the project becomes a reality with working products.
- No KYC is required by the investor to participate in the ICO.
- The ICO process is usually straight forward and easy to follow to participate or invest in the ICO coin or token.
- High risk of scams because most ICO are not regulated and anyone can initiate a scam ICO like we have seen in the past.
- Prices of Coins or tokens during ICO can drastically drop to almost nothing if the project fails to deliver its promises or in a bear market.
- ICO projects can be too ambitious which becomes difficult to accomplish the goals and targets.
When you talk of one of the most important cryptocurrencies, then IOTA is one of them. IOTA is basically a cryptocurrency that focuses on a decentralized and efficient ledger. IOTA is basically a figure of speed to represent internet of things.
The main purpose of IOTA was to become the first permissionless, feeless and production ready distributed ledger technology. Its aim was to create faster, more secure and more scalable payment system.
When it comes to the development team of IOTA, The IOTA project was originally created by Sergey Ivancheglo, David Sontesbo, Serguei Popov and Dominik Schiener in late 2015. IOTA carried out its ICO way back in 2015 and it was a huge success, with over $400,000 raised.
Features and Benefits of IOTA
ICO was a huge talk of the town back then, especially back in 2017 when there were a lot of ICOs popping up. ICOs have proven that when it is done correctly and in the right timing can be very profitable for investors like we have seen in so many of the top projects currently that did ICO years ago. IOTA is a typical example of a successful ICO project. Overall, I would say, both ICO and IEO have their pros and cons and depending on the situation each one can be the better option for the ICO project or investor.