Long confused by both ICO experts and beginners, in this article we explain the difference.
Though these terms are often used interchangeably, most agree on certain differences between an ICO and a token sale. The difference lies in a distinction between the two types of digital coins. “Crypto Coins” or “Altcoins” are digital tokens that can be used as currency, as an alternative to Bitcoin. “Tokens” are assets in digital coin form which represent other assets, rights, or actions. A house may be tokenized. So could a painting or a stock or a special item in a video game. Tokens are typically not used as currency, though there are exceptions.
Tokens and coins may both be sold during a process called an ICO (Initial Coin Offering). Alternately, a company selling a token that does not function as a currency may use the term “Token Sale”. In this way, all Token Sales are ICOs, but not all ICOs are token sales. Again, these terms are often used interchangeably.
The Nano (then Raiblocks) ICO is an example of a sale of a true currency. These tokens are authentic “coins” in the sense that they can be used as money, and that this is their primary function.
DigixDao (DGX) is a token used to represent ownership of 1 gram of physical gold. The gold is stored in a centralized facility, maintained and secured by the DigixDao company.
Nearly 350 ICOs occurred in 2017. More than double that number are set to occur before the end of 2018. The rate of new ICOs may continue increasing for some time to come, though this is not assured.
Many new cryptocurrency investors miss out on ICOs, because they hear about them only after they have concluded. There are numerous online resources (including this site) which serve to publicize and analyze upcoming ICOs. If the investor wishes to learn about promising ICOs, resources like this site and various online cryptocurrency discussion forums will provide helpful information.
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