You want to introduce something new to the world, something exciting that you’re passionate about, but you need funding to help build your team and grow your project. What’s the best way to utilize blockchain technology in pursuit of that goal?
Let’s take a look at two options in the cryptocurrency world – Initial Coin Offerings and Initial Dex Offerings.
What is an ICO?
An Initial Coin Offering can be used to raise funds for a number of different projects and it functions similar to an IPO for a publicly traded company. Coins or tokens are made available for purchase through a centralized exchange after receiving approval.
The approval process can be lengthy and is not a guarantee that a project has gone through the necessary precautions to avoid action from the SEC.
Once approved, coins and tokens become accessible to a wide audience of investors who can easily purchase them through exchanges like Binance and Coinbase. This can bring a lot of attention – and funding – to your project, but your funds might not be immediately accessible and centralized exchanges have a greater potential of hacking and third-party influence.
What is an IDO?
An Initial Dex Offering is a way to avoid the lengthy approval process on a centralized exchange by going directly to a community of investors on a decentralized exchange. That community will vet your project by researching what you have to offer and voting to promote your coin or token.
Although you will have immediate access to your funding, you may have a harder time finding investors because decentralized exchanges have a steep learning curve and might be too difficult for the average investor to understand.
Decentralized exchanges, however, are more secure, as the tokens and coins are immediately swapped between secure wallets.
Pros and Cons of ICOs and IDOs
ICO
👍 Pro: Exchanges are easily accessible to a larger number of investors
👎 Con: Funds might not be immediately accessible
👎 Con: Centralized, making it vulnerable
👎 Con: Require approval from exchange to be listed
IDO
👍 Pro: Immediate liquidity – access funds quicker
👍 Pro: Decentralized, more secure
👍 Pro: Community members vet projects by voting
👎 Con: Decentralized exchanges are more challenging to the average investor
For smaller projects looking to get immediate funding, an IDO might be a good route to take because it can get in front of investors relatively quick. For larger projects looking for widespread exposure and long-term market dominance, ICO might become the inevitable path.
Contact the team at crypto-consultant.io to help decide which is right for your project or to get started on your journey.