Initial Coin Offerings and Initial Exchange Offerings: what is the better way to buy cryptocurrencies today?

Welcome to Bintense, your trusted licensed exchange platform. Today we will dive into the exciting world of cryptocurrency fundraising and explore the main differences between Initial Coin Offerings (ICOs) and Initial Exchange Offerings (IEOs). If you’re new to the cryptocurrency space, this blog post is for you!

Understand Initial Coin Offerings (ICOs) before buying cryptocurrencies

Let’s first demystify Initial Coin Offerings (ICOs). Imagine a scenario where a start-up company wants to raise funds for its blockchain project. Instead of doing so through traditional means, such as approaching venture capitalists or issuing shares, it creates a new cryptocurrency or token. This is what an ICO is. In such an ICO, they offer this token to interested parties in exchange for established cryptocurrencies such as Bitcoin or Ethereum, or even fiat, and in this way they can raise funds from the public.

In this sense, an ICO is a way of showing faith in your startup or idea by showing faith in the digital coin they have created. ICOs became popular during the cryptocurrency boom of 2017, when many projects successfully raised large amounts of capital. These tokens were usually sold directly to the public by the project team via their website or designated platforms. During the ICO phase, investors hoped to buy cryptocurrencies at a lower price, expecting their value to increase in the future.

Presentation of Initial Exchange Offers (IEOs)

Let’s now focus on Initial Exchange Offerings (IEOs). IEOs have similarities with ICOs, but also differ in some respects. Instead of buying tokens directly from the project team, investors buy cryptocurrency tokens from an established cryptocurrency exchange platform.

To launch an IEO, a project needs to cooperate with an exchange platform that sells tokens on behalf of the project. The exchange acts as a trusted intermediary, performing due diligence on the project and ensuring compliance with regulatory standards. By accepting token sales, the exchange platform provides a safe environment in which investors can participate.

Comparison of ICO and IEO

• Security and trust: in terms of security, IEO is a safer option compared to ICO. As the exchange platform carries out a thorough screening of projects before accepting IEOs, the risk of fraud or fraudulent projects is significantly reduced. For beginners looking to buy cryptocurrencies, this extra layer of trust is crucial.
• Regulatory Compliance: while ICOs often face regulatory scrutiny due to their unregulated nature, IEOs have an advantage in terms of compliance. Exchange platforms adhere to strict regulatory requirements, ensuring that both projects and investors comply with relevant laws and regulations. At Bintense, we also have a very strict regulatory compliance, which is why we have an operating licence from the Lithuanian authorities.
• Access to token sales: when participating in an ICO, you may need to create a separate wallet or interact with different platforms to buy tokens. With the IEO, you can conveniently buy cryptocurrencies directly from the exchange platform using your existing account. This streamlined process simplifies participation for beginners and reduces technical barriers.
• Liquidity: when tokens are purchased through an ICO, the liquidity of the market may vary. In contrast, when an IEO is concluded on an exchange, tokens are usually immediately listed on the platform. This gives cryptocurrency users faster access to liquidity.

Conclusion

For beginners entering the world of cryptocurrency fundraising, it is important to understand the differences between ICOs and IEOs. Both ICOs and IEOs offer the opportunity to support innovative blockchain projects. However, IEOs offer a safer, regulated and more convenient option by partnering with trusted exchange platforms.