Tag Archives: non-fungible token

Crypto Jargon Buster (Part 3)

To read part 1 click here and to read part 2 click here.

As with any new skill or interest, it’s important that you first learn how to walk before attempting to run. In fact, with crypto, it’s perhaps even more important than most, given this is still quite a volatile space, which means lots of opportunities but also lots of risks.

With that in mind, I’ve put together a comprehensive guide on all things cryptocurrency and today we’ll get started but do so at the ‘ground floor’. There’s a lot of jargon to get to grips with, and so in this section of our report we’ll be defining those key terms for you.

As with all of our content, if there’s anything you’re unsure of or would like to explore further, you can drop us a line at hello@marketprospectors.com and one of our experts will be more than happy to help.

So, without further ado, let’s get stuck into part three of our Crypto Jargon Buster…

Initial Coin Offering (ICO)

An Initial Coin Offering (ICO) is the first public fundraiser for a cryptocurrency project, usually in the form of digital assets. The purpose of an ICO is to build a platform or protocol where it will be possible to cash in newly created cryptocurrency assets for a certain service. In Layman’s terms, this means issuing a crypto token of which the value arises from nothing. This value is based on the investor’s expectation that the project and the team behind it will successfully build an operating protocol.

In a centralised economy, this is the business model of fundraising where a series of individuals crowdfund specific project creations of a particular infrastructure. These individuals who supply investment to these projects can cash out their investment at whatever the current market value is.

The currency and protocol are worth as much as the potential value of exchanging a particular service. Therefore, the question is how much are such currencies actually worth? And which of the cryptocurrencies that fund themselves through an ICO has a bright future?

Some countries (e.g. China) banned ICO projects because in many cases such projects were scams and investors lost huge amounts of money.

Initial Exchange Offering (IEO)

An Initial Exchange Offering (IEO) is a fundraising event that is administered by an exchange, such as Binance or Coinbase.

Although the cryptocurrency project is available on an exchange, investors need to do their research behind the project and coin to ensure they are not being scammed.

Exchanges will offer coins but because they have thousands of coins available, the smaller ones might not have the capability to properly vett every cryptocurrency project on their exchange. This is a good reason to use a well known exchange at first like the aforementioned pair of Binance and Coinbase, as they have very strict vetting processes.

IEO is similar to ICO, however the IEO is hosted and managed by the exchange, which explains the name “initial exchange offering”. The token that has an IEO is offered only to members of that exchange unless the IEO is held over multiple exchanges.

Non-Fungible Token (NFT)

A Non-Fungible Token (NFT) is a unit of data stored on blockchain technology that certifies a digital asset to be unique and therefore not interchangeable. These can represent items such as photos, videos, audio and other types of digital files.

NFTs have become increasingly popular in 2021, with its primary selling point being unique proof of ownership of something you cannot physically hold in your hand. Investors, futurists and financial reports are swarming over these new digital assets and companies are even launching their own NFTs for profit and publicity.

That’s all for now but, if you click here you can get the rest of my crypto guide today.

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