Similarities and Differences Between NFT and ICO

4 mins read

An ICO is an initial cryptocurrency that owners of various companies use it to raise funds as investors. The release of new tokens caused a boom in the market and 5 years ago was considered uncontested.

In a nutshell, ICOs are utility tokens on which cryptocurrency trading is based. But is this tool so perfect, and will the technology be replaced by more global solutions? Let’s take a look at this in more detail.

Cryptocurrency Market — Growth Prospects in 2022

In 2022, miners and other enthusiasts will no longer be satisfied with using ICOs. They are actively joining projects related to NFT and DeFi. New technologies are actively breaking into our lives, and even those who make money with ICO are unlikely to deny additional prospects. Here are quick comparisons of NFTs and ICOs:

Characteristic for comparisonNFTICO
Can it be used as a payment tool in an independent ecosystem?YesYes
The funds can be considered as an essentialaindicator of something. For example, the amount of GB available for download, user experience in the gameYesNo
Wallet holders can spend coins to purchase various services and itemsYesYes
It’s a form of reward for some action. The value of the coins depends on the user experience.YesNo

The ERC-721 and ERC-1155 standards make NFTs much more promising than ICOs. If we are talking about digital art, the certification in the Blockchain is high-level secure, transactions cannot be changed or deleted. This is an advantage for developers who create games and various promotional materials. For them, NFT or DeFi is not only a way of self-realization, but also an opportunity for high profits. For example, one of Amitabh Bachchan’s NFTs, originally bought for $10, was later sold to another enthusiast for $1,200. The current owner of the NFT put it up for $2,500. Although this is not the only difference between NFT and ICO. Let’s dig in! 

Availability of Financial Solutions

Over the coming decades, our habits will change significantly. Tools like Zoom and Miro will come together in a single space, and meetings will take place in virtual offices. Such changes will be possible due to new trends in the virtual world and Metaverse. Cryptocurrency should definitely be put in this chain. It’s about both NFTs and ICOs. If we are talking about payment security, you should pay attention to the following:

  1. ICO crowd sale methods are regulated by general legislation. For this reason, platforms are preferred by accredited investors and business agents. Although this does not make the NFT ecosystem less accessible to large investors.
  2. The main platforms for the initial release of ICO are Ethereum, Stellar, Waves, and NEO. As a rule, there are barriers — $20-1000 thousand. If we are talking about NFTs, which are integrated into the Metaverse, there are almost no restrictions.
  3. When using ICO tokens, Hyperledger technology is often used. Many enthusiasts were disappointed because they couldn’t get what they promised. Even so, this type of making money can be considered high-risk.

Due to the features of the payment tool, ICO initiators do not owe to their investors. So they can get money and not pay the participants. The situation with digital art is quite different — various NFT platforms use staking to help users open the equivalent of a blockchain savings account. Thousands of developers earn additional income without the risk of losing money. 

Staking offers a reasonable opportunity to generate profit in DeFi. It originates in networks using Proof-of-Stake solutions. So people have good prospects for the growth and globalization of the Metaverse. For example, in the game Axie Infinity, you can buy Axie animals in the form of NFTs and earn up to $1000 in the process. It would be impossible for the average user to make such a profit with an ICO.

NFT vs ICO — Most Promising Digital Solutions

NFT is not an ICO, but not a Metaverse either. Annual revenue growth in the NFT market slightly decreased in the first quarter of 2022, which is confirmed by many experts. Although this is not a reason to disbelieve in Blockchain technology. In 2020, the NFT industry generated $94.9 million in sales. Last year, the growth amounted to 24.9 0million dollars. Just check the stats on the ICOholder website to be sure. 

https://pxhere.com/ru/photo/1450067

No doubt, Blockchain trends seem to be quite promising. But if we are talking about the global digital world, it is not only about decentralized financial platforms. Top brands and development teams are increasingly interested in building a Metaverse. It’s about an ecosystem that brings together blockchain, virtual, or augmented reality. Here are some confirmations:

  1. Facebook has changed its name to Meta and is creating its own Metaverse along with other startups. This decision has become an incentive for many of the company’s competitors. Global investors are no longer so incredulous about Bitcoin’s prospects.
  2. Coca-Cola collaborated with Tafi to create a collection of NFT items. This means that the company’s owners have believed in the promise of digital art. For such teams, investing in DeFi and NFT is an additional profit and increased brand awareness. 
  3. Metaverse Centrland announced plans to create a metaverse for 2022. These project owners are interested in signing a contract with HSBC to increase the involvement of eSports in gaming opportunities. Simply put, the DeFi industry will change a lot in the coming years.
  4. Twitter and YouTube have started adopting web3.0 and NFT technologies. According to The Centrland, the owners of these platforms have more than 200 partnerships, including deals with Adidas, Deadmau5, Gucci, Snoop Dogg, Warner Music Group, and Ubisoft.
  5. Decentraland became available for cryptocurrency enthusiasts in 2021. It’s a Metaverse where land is bought for the construction of shopping centers, casinos, and mini-games. The main feature of the game is the ability of users to completely control it. No rules or corporate assignments restrict gamers.

Key Takeaway

The Metaverse is becoming more global every year. But each ecosystem has its own perspectives. Any financier will confirm the fact that the popularity of NFTs is many times greater than the prospects for ICOs. This is because digital art is not just technology-based on cryptocurrency transactions. As a rule, each game has its own tokens that can be earned and then exchanged for fiat. In general, these 2 tools share some of the same characteristics:

Liquidity of a financial assetCryptocurrency and tokens are always valuable. Enthusiasts at any time will be able to profitably sell the asset (receive dividends).
High profitThe net profit from the most profitable and promising digital tokens can reach up to 14,000%. 
Large market coverageMost tokens are universal. People can not only invest, but also pay for various services within the project. With NFTs, unlike ICOs, cryptocurrency enthusiasts can have a direct impact on its further development.

The key goal of users who invest in BCT is to make a profit with local projects. This means that the release of new coins is still relevant. For example, MakerDAO is one of the first enthusiasts who entries in the DeFi ecosystem to focus on lending protocols. Surprisingly, the concept is simple and even beginners will be able to make money. Most enthusiasts are sure that DeFi and NFTs will become the future of the financial platforms. At the same time, the ICO will not be so popular, although it will be of interest to many investors.

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