ICO vs. crowdfunding — what’s different?
We live in an era where anything is possible, and dreams can become reality. In this whole technology revolution we are facing with, there is a part where people talk about blockchain, ICO, crowdfunding, Bitcoin, token sale, etc. We all have heard about some of these terms. They have become so common and popular that it is expected that in the future, each person will participate in these modern and new ways of raising money.
So, ICO vs. crowdfunding. Similar but different. Same goals, different ways. If you haven’t heard about ICO or crowdfunding, now it’s time to learn that. They are going to revolutionize the current processes of investing and raising money.
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What is crowdfunding?
Crowdfunding is a type of crowdsourcing that brings together many individuals who want to invest money to different companies and projects they want to support. It’s a quickly-growing market that has a lot of potential and it is transforming the way of how people manage with their money. On the other side, it is transforming the way of how the companies are raising their capital. Crowdfunding makes possible for the startup companies to launch their projects and sell their products online, at little costs.
On the other side, we have ICO
The Initial Coin Offering (ICO) is considered as an alternative, but different form of crowdfunding. It is a new step in the development of crowdfunding, but it has the same goal as the crowdfunding — raising money for some project in the initial stage. ICO is a fundraising tool that trades cryptocoins in exchange for cryptocurrencies. Many startup companies have ICO to raise money and to avoid the standard capital-raising process through banks.
We can see that both crowdfunding and ICO are attracting funds for a project growth. So, let’s have a look at what are the key differences between them.
Accessibility
One of the differences between these two is the accessibility. Most of the crowdfunding project are limited and restricted to a determined region or country that is native to the people included in the project. On the other side, ICOs are more global, and their accessibility is on a wider range. There is a place for people from everywhere in the world. Moreover, ICOs are more advertised in social media and more people get to know about them in comparison to the crowdfunding.
Product
The main goal of the crowdfunding projects is to gain enough investors to make their product launch successful and their capital huge enough to produce the announced things. ICO is more going around the blockchain technology. ICO products are more on the tech side and have a lot of options, based on what the company is trying to promote.
Rewards
The people who participate in crowdfunding don’t expect any reward, they can only expect acknowledgement. Some companies who launch crowdfunding projects are giving the participants some simple reward, like a t-shirt for example, to say “thank you for your contribution”. Or sometimes, the participants have the possibility to pre-order the promoted product, like a reward for their participation. On the other hand, the people who participate in ICO receive tokens in return for their contributed amount. Some of the tokens enable access to the platform and its services. Instead of using Bitcoin, Ethereum, or cash, you use their tokens to pay for services that the particular ICO offers. Some people view tokens as a chance to invest in something whose price will go up.
The crowdfunding and ICO seem to have a lot in common at first sight, but there are some differences that are important to mention. We have to be aware about the similarities and differences in such projects, in order to be sure in what are we investing. Many investors see crowdfunding as a less-risky way of raising money. On the other side, ICO is a promising, faster and easier way of raising money.
Our company Energy Premier is launching an ICO which is different than the others, because it has a live-working product with leading users. Energy Premier is a blockchain-based electricity trading platform that benefits both suppliers and consumers of electricity. It that allows its users to make electricity bidding sessions, trade with EPC tokens, and put their electricity for auction. Check out!
Thank you for reading.
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