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 |
