Difference between Currency ICO and Project ICO

Understanding the difference between Currency ICO and Project ICO

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What is an ICO?

An ICO, which is an Initial Coin Offering is a ‘crowdfunding’ event to raise funds for a startup. A company holds the crowdsale event to initiate a new project. The company creates new crypto-currency for the ICO. The development team keeps a share of these coins. The team sells the remaining coins to investors. This investment gives the financial boost to run the project. There are two categories of ICOs in general. They are the Currency ICO and Project ICO. Even though they are conceptually the same, there is a considerable difference in the approach for the two categories.

Currency ICO

In a currency ICO, the development team introduces a new cryptocurrency. The team give out coins which are the new cryptocurrencies, to the investors. The investors pay out through well-known cryptocurrencies like Ethereum and Bitcoin in return. The public attracts to ICOs because of the investment opportunities available in an ICO (e.g. Ethereum).

Vitalik Buterin in 2013, created the Ethereum platform to give people access to a new cryptocurrency, known as “Ether”. The platform also allows to create and develop newer versions of Dapps (Decentralized Applications). Ethereum is one of the best examples for the currency ICO. The Ethereum ICO raised more than 18 million US dollars within 42 days in mid-2014, making it the largest crowdfunding event back then.

Project ICO

In a project ICO, the company issues “work tokens” instead of coins. You can buy these work tokens at the crowdfunding event. These tokens give you the power to vote and to specific rights within the platform. DAO, known as the Decentralized Autonomous Application is a good example for a well-known Dapp (Decentralized Application) platform.

The public invest money on the DAO. The company gives “DAO Tokens” to the investors in return. A DAO token holder becomes a member of the DAO community. When a new project comes, expecting to be funded by the DAO, the members hold a vote to accept or reject the project. All the token holders will vote and decide if the project gets funded by DAO. The DAO manage to raise 150 million US dollars in Ether through the selling of work tokens. Another successful project ICO is Augur, the distribute market prediction system.

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