Initial Coin Offerings or ICOs are effective ways of funding cryptocurrency products. However ICOs usually launch a pre-sale phase before the actual crowd-sale. Pre-sales are usually private sales.
The two stages are often confused by people; but, it’s actually quite easy to separate the two. The difference between ICOs and Pre-ICOs are explored below:
Announcing the product
In a pre-sale, the product is only just entering the market. The company announces its products and services, and convinces the public to join the sale. Announcing the pre-sale will have a positive impact on the crowdsale (ICO stage) as people are already aware of the product.
In a crowdsale or ICO stage, ideally, the public is convinced of the product’s authenticity and value.
Investor Targets
In a pre-sale, investors are still testing the waters. Would the company accept payment and then go off the grid? Investors usually put in smaller amounts than traditional investments till the company’s longevity is confirmed.
In the ICO stage, huge investments are targeted by the company. Since the product is established in the pre-sale phase, bigger investments are made leading to higher returns.
Discounts
Pre-sales have lower targets; the digital currency is priced low and affordable to persuade more number of investors.
The ICO prices are usually higher than the pre-sale price; it includes the fund required to support higher functionalities that the phase will offer. The ICO prices are set according to the pre-sale’s performance.
Soft and Hard Caps
Pre-sales have a soft cap; a certain amount of available tokens for sale which is set by the company.
In the ICO-stage, the hard cap is usually released by the company. The hard caps are a higher amount and are the total amount of tokens that the company plans to produce.
Data Collection
Pre-ICO sale helps in data collection; flexible investors in the market, geographical areas where the sale was successful, price predictions, overall success of the product, etc.
In the ICO stage, the collected information is used to promote the digital currency sale. For e.g. the places where the pre-sale was more successful would be targeted with higher manpower and resources, a better prediction of how the currency would perform in the open market can also be formed.
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