Welcome to another informative episode of Crypto Jargon
with myself, OJ Jordan
Today I’m gonna break down the terms behind the following acronyms:
in relation to Cryptocurrencies of course.
So, let’s start with the most well-known perhaps: ICO
It’s been explained in a many videos already
and you might have seen my video from a couple of years ago,
so, I’m gonna keep it short and sweet.
it’s a form of crowdfunding a crypto-related project
at the pre-launch stage.
ICOs are frequently used by developers of a new cryptocurrency to raise capital.
Since the first Initial Coin Offering in 2013 by Mastercoin,
ICOs have become a very popular method for investors
to obtain tokens at very low prices.
At the same time,
they have also been used by many scammers for illicit funding
of dubious and even sometimes, non-existent projects,
which put pressure on many government bodies
to set up a regulatory framework for ICOs in 2017.
Currently, Chinese, Indian and American governments are amongst the few
that require KYC registration for participants in ICOs.
While 2017 was the year of ICOs
(thousands were launched back then),
2019 is definitely the year of the IEO
it’s a crowdfunding similar to an ICO
but it relies on having an exchange or
a number of exchanges
that function as a counter-party.
Developers mint the project’s tokens and send them to the exchange,
which will then sell the tokens to individual contributors.
It is more convenient in the way that the tokens
are received directly into the user’s accounts
in these exchanges
and they can start trading them straight away
without the nuisance of having to remember which wallet they used
when they placed their orders for the ICO
or you know, having them wait and claim them later on
and move them from one wallet into the exchange once they are listed.
which is a process that could take months
in some cases, even longer
and could be quite a challenge for those who are not very tech-savvy.
STO stands for Security Token Offering
and it’s a step further into providing more security for the investors.
Similar to an Initial Coin Offering (ICO),
an investor is issued with tokens representing their investment
but unlike an Initial Coin Offering,
a Security Token Offering represents an investment
contract with agreed minimum of returns
ora return of the invested amount upon failure to meet this agreed minimum.
IPO is the original term
that these stem from it – it stands for Initial Public Offering
and it’s the event in which a company “goes public”
selling early shares of their business in exchange for funds.
This term gave birth to the crypto-specific term ICO
but the two have major differences.
IPO is about selling shares of a company
with a price are determined by the profitability of that company
and the expectancy for future performance based on the past performance of that company.
While an ICO is about selling tokens that do not represent the equity of the company.
The price is based purely on hope and speculation about potential future performance of that project.
Since the project is not even launched yet.
And lastly, we have FREECO
Free Coin Offering unlike a traditional ICO
where investors are required to send money before the project is launched.
In a FreeCo, you just have to register with that project and you get some free coins.
You only get to invest later when the project is up and running.
In that regard, It’s a little bit safer than ICO
but there’s not that many of those
I just thought it’s worth mentioning it
since we’re listing the types of coin offerings.
So, this concludes today’s episode of Crypto Jargon
I hope you liked it and if you did,
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Thanks for watching! I’m gonna see you on the next one.
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