Initial Coin Offering (ICO) is equivalent to the cryptocurrency industry’s Initial Public Offering (IPO). ICOs function as a money-raising method initiated with the ICO of a company that wants to raise money to create a new coin, application or service. Interested investors can buy the offer and get a new cryptocurrency token issued by the company. This token may have some benefits for using the product or service the company offers, or it can simply represent a stake in a project related to the company.
ICOs are easy to configure due to technologies that abstract much of the development process required to create a new cryptographic asset, such as the ERC-20 Token Standard. Most ICOs work by enabling investors to send money (usually Bitcoin or Ethereum) to a smart contract that stores the funds and distributes an equivalent value at a later time in the new coin. Since you receive money from a global pool of investors, tokens collected in ICOs can be astronomical.
The ICO really caught the attention of users in July 2014. During this period, Ethereum rose to $ 18.4 million and a new era of ICO has entered.
With the success of Ethereum, ICOs have become the de facto method to fund the development of the crypto project as a token that is somehow integrated into the project.
Since 2013, ICO has often been used to fund the development of new cryptocurrencies. The pre-created token can be easily sold and exchanged on all cryptocurrency exchanges if there is demand.
How Does an ICO Work?
When a cryptocurrency entrepreneur wants to raise money through an ICO, they usually need to calculate what the project is about, how much money will be needed after the project is completed, how many virtual tokens the founders will hold, what kind of money will be accepted, and how long the ICO campaign will last.
During the ICO campaign, enthusiasts and supporters of the project buy some of the project’s tokens with digital currency. These coins are called tokens and are similar to the shares of a company sold to investors. If the money collected does not meet the minimum funds requested by the firm, the money can be returned to the backers and the ICO will be deemed unsuccessful. If the funding requirements are met within the specified time frame, the money collected is used to achieve the goals of the project.
What are the Differences Between ICO and IEO?
While ICO serves as the website of token issuers, IEO is an exchange platform.
ICO may differ between different projects. IEO directs exchange users according to AML (Risk Management) and KYC (Customer Recognition).
While personal sales are provided by the developers in the project in ICO, these transactions can only be provided through crypto money exchanges in IEO.
ICO has to collect money by attracting the attention of users through high projects to meet the market needs of companies. IEO, on the other hand, can only earn direct profit from stock exchange sites.
For the transaction to my personal after-sale token list, the ICO must reach the exchange itself; IEO can be accessed from every stock market site on which it is listed.