We were asked this question:
Some people have been comparing bitcoin forks to ICOs. Any thoughts?
@h4x3rotab and I composed this answer:
The two things are very different. An ICO is primarily about bringing in funds while forks are not.
ICOs, just like the IPOs they’re named after, are raising funds by offering ownership of a company, project, or product. Markets decide the value of the resulting crypto token. That’s why regulatory agencies are saying they look like securities (like company stocks on stock markets.)
A fork is about taking an existing project or code and producing a different version of it. A forked coin project results in a new and independent coin. Some people think of it as an ownership share of that coin’s ecosystem, but strictly speaking, all you own is the coin itself. That’s why regulators tend to treat them as commodities or currencies - things of value that can be held or traded, but don’t imply ownership of something else.
The Bitcoin Gold team does not speculate on coin price, participate in any market activity, or promote hype. We believe the value comes from the nature of the coin and the decentralization of the system. To us, the value of the coin is dependent on the ecosystem, but the coin isn’t ownership of it. By working to improve the technology and enhance the ecosystem, we’re confident we’ll increase the value of the coin, but the market decides what that valuation is.
It’s confusing to the public because both ICOs and forks both result in a digital “thing” that can be held or traded on an exchange. In the traditional world, you’ll see separate commodities exchanges (like the CME) and currency exchanges (Forex markets) and stock exchanges (like NYSE or NASDAQ) all owned and run by major financial institutions. In the Crypto world, all three types can be traded directly for each other, often on a single exchange!
You can say that an ICO is a way to take in value and then try to build something… while a fork is about building something you believe creates more value!