ICO is simply one a fund raising or crowd funding initiative in the crypto world. It is simply a process which a cryptocurrency project uses to raise funds to build the project based on the white paper. We saw the rise of ICOs in 2017 where there was a lot of projects springing up with ICOs to raise funds to build the project.
Since ICOs means initial coin offering, it basically means that it only take place in the blockchain world and uses cryptocurrency as the asset to sell to raise the required funds needed to build the project.
The ethereum blockchain was the main host of a lot of the ICOs that took place back then when ICOs was the major subject matter, due to its ability to create ERC-20 tokens easily and using that as the ICO token for sell. Once an ICO has begun, investors can purchase the coin or token based on the minimum investment rules of the project doing the ICO.
Investing in ICO can be a very risky venture because of the high risk of scams or projects not meeting up to expectations, but at the same time, investing in ICO can be a very profitable investment as well. There are a lot of projects who did ICO back in 2017 and have gone on to become successful.
What is the Difference Between ICO and IEO
| ICO | IEO |
|---|---|
| In ICO, investors purchase the coins or tokens directly from the project doing the ICO | In IEO, investors purchase the coins or tokens directly from the exchange that is involved in the IEO |
| In ICO, it is decentralized | In IEO, it is centralized because of the centralized exchange involved in the IEO |
| In ICO, investors have control of their cryptocurrency in their wallet immediately after purchasing the cryptocurrency from the ICO | In IEO, the cryptocurrency are in custody of the exchange involved in the IEO for a certain time frame |
| In ICO, you do not need to perform Know your customer (KYC) verification before purchasing the cryptocurrency from the ICO | In IEO, know your customer (KYC) is mandatory before purchasing the cryptocurrency from the IEO |
Advantages and Disadvantages of ICOs
| Advantages of ICO | Disadvantages of ICO |
|---|---|
| One of the advantages of ICO is that investors can purchase the cryptocurrency directly from the project doing the ICO | Purchasing the cryptocurrency directly from the project doing the ICO becomes a high risk of falling victim of scam ICO |
| Another advantage of ICO is that it is decentralized | Because of the decentralization, ICO is not regulated |
| Another advantage is that, investors have full control of their cryptocurrency in their wallet after buying in the ICO | Purchased coins can become worthless in a very short time |
| Another advantage of ICO is that there is no KYC which means that no verification is needed to buy into the ICO | Because of no KYC, it increases the risk of scam |
