ICO (Initial Coin Offerings) is sometimes known as a new step in the development of crowdfunding or even its alternative. ICO and crowdfunding have a lot in common: both are ways to raise funds for some project at the beginning stage when the business doesn’t have any finished product.
What is ICO?
ICO is a fundraising tool, which trades future cryptocoins in return for cryptocurrencies of instant, liquid worth. Startups use initial coin offering (ICO) to regulate the process of raising the capital needed by banks or venture capitalists. In an ICO campaign, a portion of the cryptocurrency is sold to initial contributors in return for other cryptocurrencies or legal tender, most often for Bitcoin and Ethereum. There are various ICO marketing solutions that can help you generate leads, including the use of social media or hiring ICO marketing agencies.
What is Crowdfunding?
It’s a way for companies, groups or people to raise funds directly from the public without having to use a financial institution as the mediator. As loans are getting harder and harder for small businesses and people to qualify for, thus crowdfunding has grown to be a very popular option. It is used to fund a project or a need by raising small amounts of funds from using the internet from random people across the globe.
As we see, both crowdfunding and ICO are the technique of drawing in money for the development of a project. What exactly are the key differences?
Accessibility
It’s the main difference between the two. Crowdfunding projects are limited to a specific region or country, but ICO offers a wider coverage. Coin offerings let anybody from any part of the globe to take part in an ICO.
Product
In crowdfunding, products might range from textile, software, technology, food and even hardware. Initial coin offerings revolve around the blockchain technology and are usually more towards the technological side. Some ICO examples include eSports gaming – Unikorn Gold, in banking it’s Central, BABB and Bancor, and a lot of other sectors.
Return On Investment (ROI)
Crowdfunding allows for early access to an already launched product or a working platform. You are also likely to get discount vouchers for registering and contributing. But investors who will take part in an ICO will have profit on their mind.
Associated Risk
Both ICO and crowdfunding have risks associated with them. However, the losses experienced by an ICO investor might not be similar to those experienced by a crowdfunding participant since they are not anticipating for any ROI, but simply a privileged access to a product or technology.
Conclusion
Most Bitcoin experts are very keen on initial coin offerings since the projects participating in ICOs have technical aspects connected to their systems. Projects also involved in ICO are close to success such as Decent and Ethereum.
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