Many Crypto Projects Choose Ethereum Blockchain to Launch ICO Tokens vs Others, Why?

Why ICOs Use Ethereum (Altcoin) Blockchain Over Bitcoin

Nearly everyone knows what ICOs are all about, but if you’re off the grid, an ICO or Initial Coin Offering, is a new form of fundraising. Popularly known as crowdsales or token sales, the project involves selling newly issued digital tokens to early-stage supporters of a blockchain project.

ICOs work with a particular amount of currency that it wishes to collect, known as a hard cap. Those who buy the tokens during the ICO can receive them through the smart contract technology that operates on the blockchain.

ICO Dominance In 2017

In 2017, ICOs were the talk of the town in the crypto space. New projects came up with fresh ideas on digital transformation almost daily. As such, many people were lured by the get-rich-quick hype by getting involved in the ICO projects, some of which turned out to be scams. Interestingly, a vast majority of such projects used altcoins, mainly Ethereum, as their preferred currency to generate funds.

However, unknown to many is the fact that long before the establishment of the Ethereum network, project owners used Bitcoin to fund the ICOs. Typical evidence is the Mastercoin crowdsale conducted in July 2013, which raised 5000 BTC (around $0.5 million at that time). Similarly, Ethereum-based crowdsale conducted around that time collected about 3700 BTC, which amounted to about $2.3 million.

Declining Bitcoin Crowdsales

Currently, there is a declining trend when it comes to Bitcoin-supported ICOs. Ethereum seems to have taken over the ICO territory, as most projects demand that participants have ETH in order to be involved. Therefore, why do so many ICO projects prefer Ethereum to Bitcoin?

Well, the answer to that question depends on an inside look into both cryptocurrencies. In that connection, it’s important to unravel the features of both ETH and BTC.


To begin with, many people see Bitcoin as a pioneer cryptocurrency, with a sole objective of being used as money. Bitcoin is a blockchain-based, peer-to-peer digital asset that offers a decentralized value transfer solution. It’s a means of transaction and this, agreeably, it does perfectly.

However, Bitcoin lacks the ability to perform smart contracts that are ICO-friendly. Satoshi, the creator of Bitcoin, never envisioned this feature in the pioneer cryptocurrency. To implement a Bitcoin-supported Initial Coin Offering, developers must use third-party solutions and off-chain contracts. While the crypto space is still growing and new revelations are coming up, Bitcoin currently has no standardized mechanism to support ICOs.


Most ICO projects find Ethereum easy work with because it enables users to automatically send tokens to ETH holders through the crowdsale smart contract. Secondly, Ether is a second-generation cryptocurrency, which allows the use of a programming language to create smart contracts and decentralized apps on the side.

Besides, the Ethereum smart contract automatically calculates the amount to send and sends the tokens directly to the investors.

Other Issues To Consider

Another important issue between Ethereum and Bitcoin is the Turing-completeness, which is the ability to solve computational issues. In this regard, Bitcoin is not Turing-complete, which means it cannot calculate viable solutions to computational problems, even with adequate resources and time. Bitcoin lacks two prime features that make a Turing-complete system:

  • The ability to repeat or skip instructions to meet certain conditions
  • The ability to store information as variables

On the other hand, Ethereum has the Turing-completeness. Besides, it comes with the gas payment protocol, which rewards users when they supply the resources required to process network codes. When a program runs out of gas, it simply stops executing. This safety check guards the Ethereum network against DDoS attacks.

To conclude, Bitcoin’s slow block time makes it a poor candidate for ICO support. Operating on a Proof-of-Work protocol, it takes ten or more minutes to process a single block on Bitcoin’s blockchain. This can cause network congestion and delays on ICO projects. Unlike Bitcoin, Ethereum utilizes the “Greedy Heaviest Observed Sub-Tree (GHOST) protocol, which works faster with less block creation times.

It also has intact blockchain security. These features make it a suitable candidate for ICO projects.

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