Source: https://medium.com/@SingularDTV/whats-the-difference-between-an-ico-and-a-token-launch-7105edbb2112
The term “ICO” is often used to describe Ethereum token launches. But coins and tokens are two very different things…
ICO — Initial Coin Offering — is a term created to describe the many bitcoin clones and other “coin” clones that erupted over the years. Bitcoin is basically a distributed ledger that performs best as digital money — a simple example of the power of decentralization. Satoshi Nakamoto’s consensus process is revolutionary! But you can’t build much with it. Ethereum can do what Bitcoin does. It can be digital money too, but unlike Bitcoin, Ethereum is highly programmable — it’s designed to accommodate the construction of complex applications. Bitcoin produces “coins”. Ethereum generates “tokens”. A “Token Launch” is an Ethereum thing. An “ICO” is a bitcoin/altcoin thing.
Coins really only have one utility — to act as simple stores of value with limited-to-no other functionality. By “simple” value, I mean value not represented or manifested through a variety of dynamic functions. Tokens are a completely different breed all together. They can store complex, multi-faceted levels of value. Forget everything you know about bitcoin and pre-mined coins and that entire ilk of tech, Ethereum tokens are generated by a Smart Contract System (SCS), are highly programmable and have multi-functionality because of it. They transcend being just a coin, and through their array of functions become something much more — “tokens”. Technically, they are not “offered”, they are “generated”. Probably the most accurate phrase of what’s going on during an Ethereum token launch is to describe it as a “Token Generation Event”, but I’m not sure TGE has the same flare as ICO. Nevertheless, a coin does one thing, and a token can do many things.