Even though lots of lay audience of the cryptocurrency market heard about such things like ICO, IGO, IDO and INO, not all of them know what these abbreviations stand for and, moreover, what the difference between them is. Today we are going to eradicate the ignorance of the matter and explain what these terms are, how they are different from each other despite the similarity of the terms.
Initial Coin Offering — this is what the abbreviation, similar to IPO, stands for. IPO is known among those who are familiar with stock trading and is almost the same as ICO. Initial Coin Offering is initial release of cryptocurrency on public platforms. The main goal of the event is to collect plenty of money from investors and give them a privilege of purchasing coins with very low prices which theoretically will help them to multiply their investment after selling them with more profitable prices. Investors putting up the money at the ICO stage have a better moment for entering the project and if the cryptocurrency has any potential, it will grow in the future and bring profit to the people who believed in the project at the very beginning.
Despite the fact that ICO is not different from IPO, there are some essential dissimilarities. The main reason is absence of any regulations from Securities and Exchange Commission and Ministry of Finance. Therefore, fans of the crypto industry may pick coins for their crypto portfolio from numerous tokens at the ICO stage and hope that some of them will take off and bear fruit. The second distinction between ICO and IPO is unlimited emission (or another desirable number of released coins) and the static price accompanied by dynamic offer will let the project raise as much money as they need.
Also, the format of ICO implies absence of limits in raising money from the mentioned emission. The third important distinctive feature of ICO from IPO is advantages and status of early stage investors along with some advantages. If you buy cryptocurrency at the Initial Coin Offering stage, they may have not only the voting rights as it is established in IPO but also get some perks depending on the project they participate in. This way some metaverses may give early stage investors a piece of virtual land or some items. If it refers to another project like development of the DeFi sector or a cryptomessenger, investors can take part in voting and define the future of the projects they are in to an extent.
ICO must be the most popular method of raising money among the listed in our material as the process is absolutely simple and available. Investments let investors enter the project putting up from $100 and more (depending on the project). Besides, simplicity of ICO reflects not only on investors but founders of the projects. Participation in Initial Coin Offering is available for anyone who understands at least the basics of the cryptocurrency world.
The last advantage of ICO is extensive audience reach. Due to the simplicity of the process of Initial Coin Offering, founders of projects can raise sufficient funds thanks to the large audience of the cryptocurrency world.
The downside hides in high risk. As the moment of initial release of the cryptocurrency is available for almost anyone, this opportunity attracts not only honest developers but also a huge deal of scammers. Lots of inventors lose their money and at present the world of cryptocurrency hoards lots of scam projects that aim to raise money from treasure hunters and ride off into the sunset with their funds.
The boom of such an unpleasant activity arrived in 2017 when the world welcomed projects with an opportunity of Initial Coin Offering of their cryptocurrencies. Old-timers of the crypto world remembered this period as one of the hardest moments for the industry.
Initial Dex Offering is a safer analogue of Initial Coin Offering. The main distinction from ICO implies coin availability and use of decentralized exchanges. The method is secure thanks to the fact that authors of a project attract not only money of investors but also obtain help of DEX platforms (decentralised exchange) and their pool of liquidity with stable coins. Tokens of such projects can be traded in pairs using USDT/USDC/BUSD and others.
Besides, this method of initial offering involves partial allocation of tokens to investors which removes extra risks depriving an opportunity to sell all coins after their withdrawal. This move affects the price of the currency negatively which results in its immediate collapse.
Let us explain with an example. If Company A creates a project in the world of cryptocurrency and decides to choose ICO and names it AAA-Coin. They promise 10,000 tokens AAA-Coin with the price of $0,01. Investors pay $100 for this opportunity, get 10,000 AAA-Coin on the day when the coin is released and sell them with a slightly overcharge price (depending on the number of released coins and funding) and after that easily collapse quotations down to the level of $0,005 and lower.
Alternatively, there is another situation: Company А creates a project in the cryptocurrency world and this time chooses IDO. To reach their goal they will seek help from, for example, PancakeSwap and the latter will provide liquidity (an opportunity to exchange AAA-Coin for USDT/USDC/BUSD and others). Investors can get their coins as well but this time 10,000 AAA-Coin will be distributed not in one go, but is allocated for 5 months with 2,000 in each. This way coin sales will be reduced 5 times and save AAA-Coin from the inevitable pique. This way is still risky for investors as if it turns out that the project is invaluable the creators of the coin will take out the money from the currency as investors will not have an opportunity to minimize their loss and sell 20% of their investment in a best-case scenario.
An important advantage is that the majority of IDOs is run not only by founders of crypto projects but by the administration of decentralised platforms and has a direct connection with representatives of communities of platforms. Nowadays IDO is one of the most popular ways to attract investors’ money and its risks are lower than in case with ICO.
IEO stands for Initial Exchange Offering. It is similar to IDO and ICO, however, in IDO before a coin is released for the initial offering the currency has to go through a kind of check. A third part, which is usually an exchange, runs an audit and if the new crypto asset fits the security, owners of the project will get a chance to put the coin on IEO and release it on the platform. In this model of initial offering crypto exchanges take the role of platforms in the capital market, if we want to explain using an analogue of a regular fund.
Capital markets in the classical trading, as well as crypto exchanges, explore the active and only after that they can release the assets on their platforms and do an act of public share placement (IPO).
This feature is the main distinctive characteristic of ICO making it different from ICO. If in case with the latter investors get coins after the investment round is over, after IEO coins appear only on platforms where traders can trade. To put it simply, IEO involves a company releasing their coin to the exchange for the first time and the cryptocurrency was not available to anyone. IEO is regulated by cryptocurrency exchanges while initial offering of capital issues are included in the interests of governmental consideration.
IGO stands for Initial Game Offering. In its structure it is similar to ICO, however, it is related to the world of cryptogaming. Those who like playing Play2Earn projects are looking for a holy grail via IGO. The latter let creators of cryptogaming projects attract significant funds and at initial stages they give the bravest users NFT tokens that can later be used in a game or in some cases sold on platforms.
Now cryptogaming is developing in leaps and bounds and unlike regular gaming where users entertain themselves, in this sphere gamers can earn money, and in some cases very good money. To exemplify, we can tell you about Axie Infinity. During the cryptogaming boom in the Philippines people quit their job thanks to finding an interesting alternative of earning money in this project. And they are right, why would you go to work if you could stay at home play games getting the same money as at a regular job? Nevertheless, the hype around Axie Infinity disappeared after the coin lost its value. It must have forced some cryptogaming fans accept regular jobs as their earnings dropped. But the sphere is still interesting and may be developed in the future, however, as always in crypto, you should not forget about risks.
The world of cryptocurrency owns loads of interesting terms and you should learn the sphere to keep up with the times. We will never get tired of saying that big earnings in the sphere always hide huge risks. Lots of scammers are trying to earn from people who are not familiar with the topic and every day scammers fill their pockets with money that was gained dishonestly. Explore the world of cryptocurrency, think about every step you take, learn new terms and become closer to the technology of the crypto industry and in this case you will succeed!