ICO assists you in raising funds for your business or idea through crowdsale of Cryptocurrencies, whereas in Token Sale you build a smart contract on the Blockchain in order to generate and sell your own cryptocurrencies.
Also read: What is ICO – Everything You Need To Know
Let us dig in further and differentiate between Initial Coin Offering and Token Sale.
ICO Vs Token Sale
The Initial Coin Offering has had enabled many entrepreneurs to raise funds for their idea or a running business. Most of the time it is the idea that does ICO, whereas professional investors can leverage Token Sales in order to finance that business or idea. It is observed that the companies doing ICOs are mostly technology based. These companies issue coins that can be very profitable for risk takers who believe in do or die situation. Which means you can make a lot more or exactly nothing. There is higher risk involved in ICOs but let us forget that provided you have faith in the founders and the idea that it will definitely work, maybe not at start but ultimately it will.
As compared to ICOs, the Tokens Sales are more legally governed. There are only few countries that have regulated ICOs working, while all the other have unregulated ICOs. In essence, the legally bounded companies are more likely to succeed in contrast with unregulated entities. Your money is safe them.
Also Read: Here’s How You Launch Your ICO
In addition, most of the funded entities are either ideas or MVPs, and few are those that have records of accomplishment. If you have a great feasible product with a relevant team, then it is likely that VC Firms will buy your tokens. These firms have their own methods; they receive funds from their investors and invest in selective token sales, and hold them until the tokens have sufficient value. Afterwards, the tokens are sold and profits are distributed among investors.
The most important difference in ICO Vs Token sale is that through ICO you raise funds from a crowd of people that are willing to risk their money; though, in token sales, you get to meet professional financers that are usually required for a large sum of investment, unlike ICOs that starts with as low as 1.000 €. The investment raised through ICOs is used for operating expenditure, whereas token sales funding are used to accumulate capital for investments. As for profits, token buyers and ICO investors are both at advantage. They can sell off during an unusual hype of increased prices, in order to earn a small and a quick profit. However, keep this in mind that the evaluation of Tokens grow gradually as compared to ICOs. It develops gradually and can potentially bring in higher profits than ICOs. Which means you should hold your tokens during a surge.
ICOs are for those who are after smaller and quicker profits, and Token are for those that can wait until their seed grows into a full tree, and help them earn huge profits. Moreover, the Token investment is more secure and regulated than ICO. When you invest in any of them, make sure you are not in urgent need of that money you invested, since it is a big risk, which rarely proves successful but when it does, it can turn the tables around. Therefore, the VC Business Models should think of adopting token in order to keep up with the growing technology.