Learn Crypto and Blockchain

Welcome to the Phemex Academy: a free, comprehensive and unbiased resource for blockchain-related knowledge
Crypto Academy
Phemex Blog
Phemex Crypto Blog: Learn the latest news, updates, and industry insights on bitcoin futures, bitcoin trading, crypto derivatives exchange, and related blockchain technology.

IEO v.s ICO: What are The Difference?

As is often the case in the world of technology, the field of cryptocurrency is also filled with abbreviations, jargon, and slang. In the past, we’ve looked at some slang words such as Fud and FOMO, along with some jargon involving spot trading vs futures. Now we’re going to take a look at two key abbreviations that often get bandied around the crypto space: ICO and IEO.

ieo-vs-ico

What is an ICO?

An ICO is an Initial Coin Offering, a concept comparable to crowdfunding. It generally entails a company or project releasing a whitepaper detailing its ideas for a new coin. Investors then fund the project allowing for the creation of the coin and the infrastructure needed to run it. In return for this investment, they are given a specific number of tokens corresponding to their contribution to the project. If the project succeeds, like Bitcoin, investors are likely to become quite wealthy. If it does not, they lose their initial investment. This is the most common way in which new cryptocurrencies and projects are born. Given the highly volatile and nascent nature of this industry, success and failure are just as likely. When looking at ICO’s it is essential to examine the team behind the project, their motivations, background, the technology used, and the ultimate goal.

What is An IEO?

An IEO is an Initial Exchange Offering. The big difference between these two is where exactly the offering takes place. An IEO is still similar to crowdfunding. The idea is to get people to invest money in a new coin or token in exchange for the coin or token itself. However, with an IEO, these are distributed only through a specific exchange meaning only users of that exchange can partake. In theory, this makes it safer if it’s an exchange that you trust. You can be sure that they would have vetted the IEO and performed the due diligence to minimize risks as much as possible. With that in mind, its not a guarantee of quality, as exchanges in the past have been known to list coins only because they were paid or incentivized to do so. It is also easier to buy into an IEO than an ICO as all you need to do is follow the usual procedure for acquiring coins/tokens through the exchange.

ICO v.s IEO

ICO – Initial Coin Offering IEO – Initial Exchange Offering
You need must research the project and team to make sure it is not a scam. The exchange will have already conducted due diligence to protect themselves and their customers.
You must buy or obtain the token from the project’s separate platform. You buy the token through the exchange in the same way as you would other tokens.
You will have to wait for the token to be listed on an exchange before you can trade it. You will be able to trade the token immediately after the IEO.