What Is an Initial Token Offering (ITO)?

ITOs are very similar to initial coin offerings (ICOs) — and the two terms are often used synonymously. However, there are some subtle differences to be aware of.

Instead of being used to fundraise for a new cryptocurrency, the focus of ITOs usually centers on offering tokens that have proven (or unproven) intrinsic utility.

This could include granting investors access to a platform through a subscription, with token holders unlocking the right to use exclusive services within an ecosystem. An example of this could include an exchange that ends up offering lower trading fees. 

ITOs are more closely related to tokenization as opposed to crowdfunding.

There is a key distinction between coins and tokens in the crypto sector, even though both terms are used interchangeably for the most part.

Coins are cryptocurrencies that operate on their own independent blockchains such as Bitcoin, XRP and Ethereum. On the other hand, tokens are cryptocurrencies that operate on an existing blockchain — and assets typically tend to use Ethereum’s ERC-20 standard.

ICOs fell out of favor with the public, and became less common in the crypto industry, after a number of projects were outed as scams, and others collapsed in value shortly after launch.