Cryptocurrency Offerings Explained: ICO vs. IDO vs. IEO

If you’re familiar with stocks, you’ll know that an IPO is an initial public offering. This is when professional investors, independent speculators, and supporters can buy shares in a company. The launch of cryptocurrencies is a little different from the launch of stocks.

Cryptocurrency projects include ICOs, IOOs, and IOs. Interestingly, these are essentially different versions of an IPO in which a cryptocurrency project can be involved in any one, any combination, or even all of them. But what are they? What do they mean and how are they different?

What Is an ICO?

An ICO is an initial coin offering. After an ICO, anyone can buy cryptocurrencies directly from the organization hosting the project to support the project.

Prior to an ICO, there is usually no coin supply or circulation. Or, in other words, the organization behind the project may have restricted the supply and circulation of coins. For example, a coin may already be minable, but it was only open to miners at the time. ICOs can also be public (open to anyone) or private (open to specific investors, etc.).

Before exchanges became popular, ICOs were the original “cryptocurrency IPOs.” For example, when Bitcoin had its “ICO”, it was impossible for it to be listed on an exchange because there were no cryptocurrency exchanges at that time. Because an ICO involves buying tokens directly from a project, you have to really trust what you’re investing in because it may not have been validated in any meaningful way.

What Is an IEO?

IEO is the first exchange offering. Cryptocurrency trading has all one verification process, so cryptocurrency projects that can enter the exchange are usually more reliable. In addition, when you buy from an exchange, you do not provide any payment information to the personal items you invest through the exchange.

Since it takes time to be validated by an exchange, some projects may have an ICO and then an IEO later. However, since cryptocurrency projects are easier to spot and more likely to succeed on exchanges, a project may not have its own ICO and instead wait to be “listed” on the exchange.

Another reason crypto projects turned to skip ICOs is that they are afraid of regulators. For example, did you know that Coinbase reports to the IRS? Therefore, selling through exchanges can alleviate some of the pressure on institutions hosting actual cryptocurrency projects.

What Is an IDO?

The IDO is an initial DEX offering, where “DEX” is a decentralized exchange. A decentralized exchange is like a normal exchange, but no one is responsible. Therefore, instead of buying coins from sellers, exchanges sell coins to buyers, and buyers and sellers just do business with each other.

If ICOs are buying from artists and exchanges are buying from auction houses, then decentralized exchanges are buying from flea markets. It’s simple, it’s fast, and it’s fun, but it puts a lot of responsibility and pressure back on the buyer – just like an ICO. In fact, decentralized exchanges predate the more popular centralized exchanges today.

Just as a project can have an ICO and subsequent IEO, a listing on a DEX may already have an IEO and ICO.

And that’s not all

There are still other ways for cryptocurrencies to get into people’s hands. However, most of them are related to different kinds of cryptocurrencies – because they are not all the same.

For example, security tokens operate a lot like shares in a company. The only real difference between security tokens and stocks is that security tokens are on the blockchain, not registered. However, not belonging to cryptocurrencies, or to stocks, means that they can avoid answering to almost everyone.

These projects have security token issuances. However, these offerings are usually limited to organizations such as investment groups.

ICO vs. IDO vs. IEO

Many cryptocurrency projects with ICOs have been successful. Many cryptocurrency projects listed on exchanges have not been successful. The experience of decentralized exchanges can be positive or negative. No matter how you buy cryptocurrency, you should make sure to do serious research.