For anyone to show an interest in knowing the difference between digital currency and initial coin offering, they must already have been in the cryptocurrency and Bitcoin space for a good long while. If you’re a determined investor in cryptocurrency like Bitcoin, Ether, Ripples, and the likes, this is one knowledge you would be much interested in gaining, and we’ll go over it here.
In this article, we will look at the terms cryptocurrency and initial coin offering. We will then look at what the difference between these two is. I’m sure you have heard about these two in your crypto journey, and you probably had been using them interchangeably. Don’t worry; we’ll delineate them here and now.
What is cryptocurrency?
A cryptocurrency is a decentralized network that runs on blockchain technology. Although not all of the cryptocurrencies are decentralized, you’ll hardly find one that isn’t. Unlike the traditional currencies that we can see, hold, touch, and, probably, make counterfeits, a cryptocurrency is virtual and digital. It is secured by cryptography, and this means that no one can produce a fake.
The word crypto results from several cryptographic techniques and encryption algorithms used to protect the entries and transactions on the blockchain. In this regard, some terms you would find are hashing functions, elliptical curve encryption, and public/private key pairs.
Investing in cryptocurrencies is a somewhat risky game as it isn’t controlled by any government body and is volatile and vulnerable. The exchange rates can fluctuate in your favor sometimes and against you at other times. The currency isn’t regulated; it is influenced by the level of demand and supply it gets.
What makes cryptocurrency a lot safer than other currencies is that every transaction done on the blockchain can be traced down to the beginning. If there’s been any fraudulent activity at any point in the cryptocurrency exchange, it would easily be fished out.
Cryptocurrencies are one of the most secure modes of online payment. You simply have to get yourself a crypto wallet, the receiver’s address, and some cryptocurrency to send.
Types of cryptocurrency
There are thousands of cryptocurrencies in the crypto space currently, but the narrative was different before 2009. The first cryptocurrency to ever be known is Bitcoin, and it has significantly been successful over the years. One Bitcoin currently costs around $10,980, and this could either go up or down in days, but speculators believe that there’s a higher chance that it would increase rather than decrease.
Bitcoin’s success has birthed alternative coins (altcoin) such as Ethereum, Litecoin, Bitcoin cash, Namecoin, Cardano, and ripples. These are currently taking the footsteps of Bitcoin and are gradually gaining traction and success, especially Ethereum.
What is an initial coin offering (ICO)
If you have been in the business environment for a while, you would know that the term “Initial coin offering” is familiar. Yes, initial public offering (IPO) is a term that you should be used to. Just as IPOs are used by regular businesses to raise funds for their business, ICOs are used by cryptocurrency companies to raise funds for a new currency that’s going to be introduced.
ICOs are referred to as crowd sales, whereby the investors would not be buying the digital currency but would be paying for a share in the cryptocurrency company. As you may have already guessed, you would get returns and dividends on your investment.
Investors who want to be part of the digital currency company need to already have some in-depth knowledge about what cryptocurrency is and how their investment may result in losses should digital currency fail to grow as expected. ICOs can be purchased with the traditional currency or with another virtual currency like Bitcoin.
No government body regulates initial coin offerings. However, if fraudulent activity is found out in a company’s practice, the SEC could intervene, and the investors could get a refund. Another thing that can make a crypto company refund the investors’ fund is a situation where the amount that has been raised to launch the cryptocurrency isn’t up to the amount that the company has budgeted for.
Now that it is pretty clear what the two terms are, let’s take a look at the few differences between these two terms.
Differences between cryptocurrency and initial coin offering (ICO)
The following are some of the notable differences between cryptocurrency and initial coin offerings. You would probably have figured most of them out from the definitions of the terms, but let’s go over them more precisely.
- Cryptocurrency is a virtual currency that is secure and safe, while ICOs are just like investments in a company’s shares.
- Unlike cryptocurrencies, ICOs cannot be traded. Once you buy it, you can only get returns from the company. This simply means that you cannot purchase anything using your ICO just as you cannot purchase anything using your Bond, Shares, or Debentures.
- Cryptocurrencies can be bought at any time of any day. As for ICOs, you would have to wait and be on the lookout for a cryptocurrency company with ICOs to offer before you can invest. There isn’t a specific place to go to if you want to invest in an ICO; you just have to check online for the news regularly.
- Government agencies can influence the activities of an ICO but not of cryptocurrencies.
The only similarity between ICOs and cryptocurrencies is that you must own a cryptocurrency wallet before you can invest because that’s the only way you can get your returns. And though ICOs are real dealings with a real company offering a cryptocurrency, they’re still not regulated by any government agency.
Cryptocurrency is currently being accepted in almost every business enterprise, including casinos. You can visit Bitcoin casinos to play some of your favorite slots and games like Pai Gow Poker and the likes. To learn more, you can check out Pai Gow Odds to see the mouthwatering benefits you’ll get from playing with Bitcoin.
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