The Main Differences between ICO and IPO

by admin | July 16, 2019 9:11 am

Companies usually raise funds via an Initial Public Offering (IPO), where organisations sell their shares to institutional and individual investors. On the contrary, crypto projects raise financial funds via a method that is called Initial Coin Offering (ICO) and because of its effectiveness, even traditional organisations use ICOs to raise money; companies like Telegram and Kakao.

Regardless of the fact you invest in an ICO or any crypto coin, sooner or later you will need cryptocurrency portfolio management[1] tools to easily manage your crypto trading.

Getting back to the core subject, let’s discuss main distinctions between ICOs and IPOs.

First of all, instead of selling corporation stocks, ICOs release tokens for the public to purchase at lower prices – starting from 5% discount up to 70% even 80% discount on the token price, before it goes listed on exchanges, giving extra motivation because of the potential profit that can be made. So, once it’s listed on exchanges investors can make right away huge profits.

Another difference is that only already established and developed societies can launch an IPO. At the same time, many societies doing ICOs, do not even have the final product to demonstrate which is quite risky as you do not have any guarantee that the final release or product will go live.

Next, IPO investors get corporate stocks, becoming shareholders and being given rights to vote at annual general meetings and/or dividends. Shareholders can also grow up together with the organisation, as well as see their shares increase in price as the company develops.

In contrast, investing in an ICO doesn’t give any corporate stoke and rights to vote in the annual general meeting of the corporation. However, tokens can gain in price and bring profits to investors.

One of the main differences is the legislative framework, which is completely distinct. Before a private organisation can run an IPO, it needs to submit an application to appropriate authorities and obtain permission. On the other hand, ICOs are decentralized, which makes a clear regulatory creation quite complicated.

Indeed, the key distinction between ICO and IPO is that IPO works properly when it is centralized and the company completely controls it. On the contrary, ICO works properly when it is decentralized and there doesn’t exist any central regulation.

ICOs need to have more regulations to establish more trust in serious investors. Consequently, the market cap can grow on volume. Anyway, there are already big and revolutionary companies that grew from ICOs willing to completely change our lives. It’s just a matter of time to be more secure and stable, so smart money can bid on larger volumes. Afterall, if you invest in ICOs or crypto coins, at some point you will need crypto trackers. Thus, to know more about crypto tracking tools, have a look at this cryptocurrency tracker[2] guide.

Endnotes:
  1. cryptocurrency portfolio management: https://coinstats.app/en/portfolio
  2. cryptocurrency tracker: https://blog.coinstats.app/crypto-portfolio-tracker/

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