intrinsic value</strong></a> can be subject to interest rates. For example, a computer, a car, a house, or even a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-cryptocurrency/">cryptocurrency./nThere are two terms you must know in regards to interests rates: APR and APY.</p>\n<p>When a person takes out credit, they’re charged an interest rate which is described as <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-annual-percentage-rate-apr/">an annual percentage rate (APR)</strong></strong></a>. It determines the amount of interest paid each year based on the full loan. </p>\n<p>Investors, individuals, or institutions that give out loans aren’t the only ones that reap the benefits of interest rates. For example, a bank pays its client an interest rate for holding their personal funds in a savings account provided by the bank. That interest rate defines how much the client will earn over one year and is also known as <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-annual-percentage-yield-apy/">an annual percentage yield (APY)</strong></a>.</p>\n<p>When it comes to the cryptocurrency sector, interest rates operate the same for the most part except there are a few extra intricacies. </p>\n<p>Generally speaking, the cryptocurrency market is <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-volatility/">volatile. These high levels of volatility make the <strong>interest rate fluctuate significantly over a short period of time</strong>.</p>\n<p>The interest rate is related to the amount borrowed. Therefore, if the borrowed amount increases in value, then the absolute value of the interest rate will increase accordingly. With the exception of <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-pegged-currency/">currency pegging</strong></a> at the time of borrowing.</p>","level":"easy","meta_title":"What are Interest Rates? Definition & Meaning | Crypto Wiki","meta_description":"Interest Rates meaning: Interest Rates - defines the percentage which is charged for taking out a loan.","meta_keywords":null,"language":"en","created_at":"2022-03-22T15:40:47.000000Z","updated_at":"2022-05-13T14:32:23.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-are-interest-rates"},"prevSection":{"id":469,"original_id":null,"author_id":43,"translator_id":null,"title":"What is Initial Public Offering (IPO)?","slug":"what-is-initial-public-offering-ipo","section":"I","keyword":"Initial Public Offering (IPO)","status":"published","definition":"happens when a company starts selling shares on the stock market for the first time.","content":"<p>An initial public offering (IPO), also referred to as an initial purchase offering, defines <strong>an event when a company starts selling shares on the stock market for the first time ever</strong>. It’s considered to be a noteworthy milestone since the company has successfully reached a point where they’re able to offer stocks and reach serious investors. Usually, startups and relatively new companies look for opportunities to introduce an initial public offering.</p>\n<p>If a company hasn’t announced an IPO, then it is considered private. While there are benefits for a company to stay private such as reduced risks, there are also downsides like the fact that private companies can attract only a limited number of investors. <strong>By announcing an IPO, the company becomes visible on the stock market for the first time</strong>. Then it’s able to take advantage of its new position in the market by getting more investments and improving the company’s overall performance.</p>\n<p>An initial public offering provides startups and new companies that are expecting growth with a huge opportunity to finally go public and attract more investors.</p>\n<p>In order to be eligible for announcing an IPO, a company has to reach a private valuation of 1 billion US dollars and go through a strict checking procedure done by the <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-securities-and-exchange-commission-sec/">Securities and Exchange Commission (SEC)</strong></a>. Additionally, the company must carry out a thorough potential share price evaluation. During this process, their private shares are turned into public shares.</p>\n<p>After establishing that the company is able to announce an IPO, a certain amount of time is taken to introduce and popularize it in order to prove that this is the prospective company you want to invest in.</p>\n<p>How often an IPO is announced depends on the economic situation. For example, barely any companies announced their IPOs during the 2008 economic crisis. </p>\n<p>In the current market, as the global economy recovers, more and more companies are considering moving from private to public. </p>\n<p>The <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-initial-coin-offering-ico/">initial coin offering (ICO)</strong></a> was based on the design of an IPO. Thus it often encounters the same difficulties as IPOs. Instead of offering shares, ICO offers cryptocurrencies.</p>","level":"medium","meta_title":"What is Initial Public Offering (IPO)? Definition & Meaning | Crypto Wiki","meta_description":"Initial Public Offering (IPO) meaning: Initial Public Offering (IPO) - happens when a company starts selling shares on the stock market for the first time.","meta_keywords":null,"language":"en","created_at":"2022-03-22T07:03:44.000000Z","updated_at":"2023-01-11T13:10:46.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-initial-public-offering-ipo"},"currentChapter":"I","currentSection":"what-is-initial-token-offering-ito","chapterTitle":"I","readingLevel":"easy"},"url":"/crypto/learn/crypto-terms/what-is-initial-token-offering-ito","version":"cdd198d50cbe5c9c21c9329d7c096ffc"}" class="container-fluid d-flex crypto-book p-0"> Crypto Terms: Letter I
What is Initial Token Offering (ITO)?
Initial Token Offering (ITO) MEANING:
Initial Token Offering (ITO) -
is the use of tokens to raise capital in the crypto sector.
Let's find out Initial Token Offering (ITO) meaning, definition in crypto,
what is Initial Token Offering (ITO),
and all other detailed facts.
Initial Token Offering (ITO) describes a type of event whose main purpose is to raise funds for a cryptocurrency project.
ITOs and initial coin offerings (ICOs) are two terms that are often used interchangeably. While they’re similar, there are a few differences that set ITOs apart from ICOs.
Unlike ICOs where the crowdfunding process is aimed at cryptocurrencies, ITOs prioritize offering tokens that have intrinsic utility. For instance, investors receive access to a specific platform through a subscription where token holders are able to take advantage of exclusive features.
Essentially, ITOs have a lot more in common with tokenization than crowdfunding since coins are tokens are not the same. While both coins and tokens are part of the cryptocurrency bubble, tokens mostly operate on an existing blockchain based on the ERC-20 standard while coins operate on their own independent blockchains like Bitcoin, Ethereum, and XRP.
Initial coin offerings became a controversial topic after some projects turned out to be scams. Moreover, some of the projects that implemented ICOs crashed soon after launching. It’s slowly becoming less and less common in the cryptocurrency world.
