Last year saw the emergence of a promising ICO alternative called IEO, which is closely watched by many investors. Let’s see what the difference between these concepts, hiding behind such euphonious abbreviations, is.
Tokenization refers to the process of replacing important information with a set of unique identifying characters (you can call it a token or a label) containing all the necessary message details. Thus, a digital passport is created, which can receive any tangible and intangible asset or some action, for example, payment, or time, or legal status. This passport is a unique digital code that can be further transmitted over communication networks. All types of economic activity and all types of assets can potentially be tokenized. This is what makes it fundamentally different from ICO.
Tokenization can take place on any platform designed for this. For example, the Artex platform was developed to tokenize art objects, and the Atlant platform for real estate. However, on most of them, the process of creating and circulating tokens is opaque and poorly protected. Only blockchain today offers a transparent and secure procedure for issuing and circulating tokens.
That is why tokenization is often understood as the introduction of blockchain technology into production processes. This technology is considered revolutionary by many because it can forever change the way people interact.
ICO (Initial Coin Offering) is the release by a startup of its own units of cryptocurrencies (tokens) in order to attract investors for its development.
IEO (Initial Exchange Offerings) is a promising fundraising method for startups selected by a cryptocurrency exchange. It is she who, acting as an intermediary between the new project and investors, organizes the token sale and sells tokens.
We can say that IEO is an improved ICO, where the main partner of the startup is the exchange, and the listing takes place a couple of days after the end of the token sale, and not six months later, as is often the case with the ICO. To become a full-fledged IEO participant, you must register and verify (KYC verification) on a cryptocurrency exchange. Then you need to pay 20 BTC to launch the token sale. In addition, you need to conclude a contractual agreement, where the following transaction parameters must be spelled out: the cost of one token, the volume of issue, soft cap, hard cap, exchange commission, etc.
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