In recent years, technology has advanced rapidly. Great opportunities for business and investment have appeared on the Internet. Since the crypto industry developed, it is not surprising why a considerable number of people became interested in terms such as Blockchain, Altcoin, Initial Coin Offering, Crowdfunding, and the like.
This article will pay special attention to two things that have become extremely popular. We will present them so that you understand the main differences between them. These are Initial Coin Offering vs Crowdfunding.
Well, first of all, let’s see what each of these terms means before we present you with the top three differences, shall we?
What is Initial Coin Offering – definition and explanation
Initial Coin Offering, or ICO, represents a crypto industry’s equivalent to Initial Public Offering. It is a distribution event for tokens. These tokens are hosted on a blockchain platform in general. The structure of Initial Coin Offerings may vary. However, they are usually in the form of a startup, announcing their idea and declaring a date for the funding of that idea.
During an Initial Coin Offering, any individual can buy tokens in exchange for others, which happen to be more established cryptocurrencies like Ether or Bitcoin. The
ICO calendar represents a handy tool that helps people stay on top of the newest digital currencies and increase their chances of getting more profits.
What is Crowdfunding – get the brief explanation
Crowdfunding is very similar to Initial Coin Offerings in format. For instance, one particular startup announces an idea and date for fundraising for that idea. Before launching that campaign, the startup will release certain documents about that idea and the market need for that kind of solution.
When the crowdfunding campaign begins, that startup will accept contributions from backers. If a funding threshold is not met, the funds will be returned to the backes. However, above the point, the startup will keep the money and use it to develop the promised product.
Top three main differences between ICO and Crowdfunding
Now that you’re aware of the real meaning behind the terms “ICO” and “Crowdfunding”, it’s time to learn the top three differences between them.
#1 Rewards are different
Before all, the significant structural difference between ICOs and Crowdfunding are rewards. When we say “rewards” in ICO, we refer to the tokens’ participants. On the opposite side, crowdfunding backers receive some other types of rewards.
It may be a physical product or simply a “thank you” card. Crowdfunding campaign rewards are entirely up to the startup to determine.
#2 Crowdfunding campaign is limited
Even though both ICOs and Crowdfunding are open to the public, a typical crowdfunding campaign will be geographically limited to the countries where the crowdfunding platform operates.
#3 The startup will build with the funds they raise
Perhaps one of the biggest differences between ICOs and Crowdfunding is that the startup will build with the funds they raise. ICOs, in general, correspond to a technology platform or project. The forum will accept tokens then as a method of payment for services.
Although both methods are prevalent and seem very similar, with the help of these examples, you will know how to distinguish them in the future properly!