Initial Token Offering (ITO) is a system that is very similar to Initial Coin Offering (ICO) — and the two terms are often used synonymously. However, there are some subtle differences to note.
In contrast to its use to raise funds for a new cryptocurrency, the focus of an Initial Token Offering typically centers on offering tokens that have been proven (or have not been proven) to have intrinsic utility. This could include giving investors access to a platform through a subscription, with token holders unlocking the right to use exclusive services within an ecosystem. For example, an exchange may offer lower trading fees to token holders.
Detailed Explanation of Initial Token Offering (ITO)?
Initial Token Offering is more closely related to tokenization than crowdfunding. There are key differences between coins and tokens in the crypto sector, although the two terms are generally used interchangeably. Coins are cryptocurrencies that operate on independent blockchains like Bitcoin, XRP, and Ethereum. On the other hand, tokens are cryptocurrencies that operate on an existing blockchain — and assets typically use Ethereum's ERC-20 standard.
The decline in public interest in ICOs, which are becoming less common in the crypto industry, comes after some projects were exposed as scams and others experienced significant drops in value soon after launch. This changing trend is driving the emergence of new funding models such as Initial Token Offering (ITO), which places emphasis on the intrinsic value and utility of the token being offered.
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DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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