ICOs, TGEs, ITOs

If you’ve had an ear towards the Cryptocurrency world undoubtedly you have heard the term ICO. Often thrown around liberally the acronym for Initial Coin Offering (which is modelled after the financial term IPO or Initial Public Offering) has become one of the biggest buzzwords in Crypto. But amongst the plethora of projects that are published daily how many are actually ICOs? What does ICO really mean?

 

Not every project involving a coin or token is an ICO.

By definition and ICO is an Initial Coin Offering, a crowdfunding method in which a company offers their cryptocurrency to the masses in order to raise funds for their project. However, the keyword in this instance is coin which would suggest the project uses a new Cryptocurrency created solely for the company’s project. In the case of companies creating tokens on an established blockchain the term ITO or Initial Token Offering is more apt since a new cryptocurrency is not being created for the project functionality. Often these tokens are based on the Ethereum blockchain, but it is applicable to any asset created on a pre-existing blockchain. To call a project that does not actually create a new cryptocurrency an ICO is false.

 

Why does calling a project an ICO or an ITO matter?

Ask yourself when was the last time you heard someone in the crypto space mention the term “ITO”? The majority of people have probably never heard anyone mention an ITO. Firstly, because evidently many cannot tell the difference between the two terms and secondly people do not actually understand the range of different applications they each have. A coin has vastly different functions to a Token.

 

What is the difference between a coin and a token?

Coins really only have one function, to simply represent value. There is little to no further functionality to most coins. Tokens are the evolution of coins. Tokens can store complex multi-faceted levels of value. Specifically, Ethereum Tokens which can be programmed to have an array of functions. The fact Tokens do not just hold value and are highly programmable completely differentiates them from coins. In fact, to even ‘offer’ tokens is somewhat false. Tokens are ‘generated’ and this keyword brings another acronym to the fore, TGE.

 

What does TGE mean?  

TGE stands for Token Generation Event a term which may be the most technically accurate way of describing a crowdfunding event for a project using tokens. Since Tokens are not offered but generated in order to provide some function or utility the term TGE is a much more accurate way of describing token-based crowdfunding project. In an ideal world all of these terms would be used correctly to help people navigate the Crypto world less inhibited but ultimately ITO and TGE are usurped by the popularised term ICO. Despite the accuracy of ITO and TGE they have become almost synonymous with ICO. As token projects continue to be marketed as ‘ICOs’ and ICOs gain traction as a fundraising method in the cryptocurrency market the terms will only sink deeper into obscurity, but you can rest assured you now know the difference.