Bitcoin
BTC$64 364.24

-0.32%

Ethereum
ETH$3 416.30

-0.72%

Tether
USDT$1.000190

-0.02%

Binance Coin
BNB$570.57

-0.84%

Solana
SOL$156.65

-2.73%

XRP
XRP$0.630018

8.50%

ICO vs IPO: Differences Explained


06 May 2019

ICO vs IPO: Differences Explained so That Your Choice Is the Right One


Both IPOs and ICOs are done to raise money for a young company. Both of these forms of financing have been hyped at one time or another. The IPO peak was before the Internet Bubble burst in 1998. There have been many successful and record-breaking IPOs since then, but it never quite captured the fascination of the public at large since those heady times. The same can be said of ICOs. The last year has seen an increase in the amount of money raised, but the excitement in the general public over a form of investment that was never before open to them has died down in recent times.

The basics outlined


The newness of ICOs means that regulatory oversight is somewhat lax. This is improving slowly but is nowhere near the regulatory burdens suffered by traditional firms looking to release an IPO. IPOs also have a history of how they been done, how the due diligence is done and what third parties are trusted in the IPO space. This does not exist with ICOs, which can be put out for an extremely small amount of money (relative to IPOs).

One key difference is that an IPO gives you a share of the company whereas an ICO is aimed at improving adoption of a token. What you get when you buy a token via an ICO is the potential to use it within the network that it was released for the purpose it was released — taking, for example, a company that focuses on decentralized entertainment. Something along the lines of Netflix with BitTorrent's distribution system. Token on the FlixTorrent network would be used to pay content creators for their work. If you bought these after an ICO, they would be far more expensive than if you had bought them at an ICO. IPOs, on the other hand, is relatively simple to explain. You buy a share; you are entitled to a dividend and all sorts of reporting on what the company is doing.

Another key differentiator is the openness of the two forms of financing. IPOs are closed off to the vast majority of people. They are very exclusive, and only the relatively wealthy have any access whatsoever to IPOs. Not everyone can buy Google shares right now, never mind the small (but exceedingly wealthy) pool of initial offering investors when Google was released to the "public."

ICOs, on the other hand, are truly public offerings. Anyone can get involved so long as they have a wallet that accepts the token being released and they have money to spend on Bitcoin or Ethereum for which the tokens are swapped.

Regulations tightening the rules for ICOs


All that said, laws are being formulated to make sure that ICOs are treated as securities for the purpose of regulatory oversight. This will have a tremendous impact on future ICOs and the firms that use them.

Securities are very different from tokens, which can be anything and everything. While the scams that have characterized the ICO landscape up until now will dry up with tighter regulations, it can also harm the health of the industry. Particularly with regards to innovation, which is at an all-time high for blockchain technologies.

Classifying all tokens as securities will severely hamper the way they can be used as an alternative to current problems where blockchain can be a huge disrupting influence. A token can be used in a supply chain focused distributed ledger to maintain the integrity of the supply chain. That becomes impossible if the tokens are automatically classified as securities. These problems are just beginning, and it is ICOs that have to lead to this problem. Sometimes, it would have been better for crypto companies to have stuck to IPOs, at least according to the wider community that does not like where ICOs have lead regulators.

Author: Ali Raza for: Crypto-Rating.com

Related

NordFX Copy Trading: A Comprehensive Guide to Maximizing Profits
NordFX Copy Trading: A Comprehensive Guide to Maximizing Profits
Is a forex hedging strategy effective?
Is a forex hedging strategy effective?
Tips to Choose the Right Second Citizenship Program
Tips to Choose the Right Second Citizenship Program
Can ChatGPT trade better than humans?
Can ChatGPT trade better than humans?
Bitcoin’s continued slide down
Bitcoin’s continued slide down
A new round of crypto market mistrust
A new round of crypto market mistrust
How to Trade with ChatGPT. Tips and Tricks of AI Trading
How to Trade with ChatGPT. Tips and Tricks of AI Trading
Mastering stop loss for indices trading: 5 essential strategies
Mastering stop loss for indices trading: 5 essential strategies
Introducing Exness Team Pro - The voice of the markets
Introducing Exness Team Pro - The voice of the markets

Top Cryptocurrencies with Price Predictions

# Crypto Prediction Accuracy CVIX Price 24h 7d Market Cap 7d price change
1 Bitcoin (BTC) BTC Bitcoin predictions 77.6% 43 $64 364.24 -0.32% 11.97% $1 269 716 723 462 BTC 7 days price change
2 Ethereum (ETH) ETH Ethereum predictions 76% 50 $3 416.30 -0.72% 10.22% $410 712 230 766 ETH 7 days price change
3 Tether (USDT) USDT Tether predictions 94% 1 $1.000190 -0.02% 0.03% $113 246 119 775 USDT 7 days price change
4 Binance Coin (BNB) BNB Binance Coin predictions 78% 43 $570.57 -0.84% 9.29% $84 205 292 105 BNB 7 days price change
5 Solana (SOL) SOL Solana predictions 81.6% 36 $156.65 -2.73% 11.05% $72 712 740 994 SOL 7 days price change
6 XRP (XRP) XRP XRP predictions 78% 43 $0.630018 8.50% 44.13% $35 158 388 966 XRP 7 days price change
7 USD Coin (USDC) USDC USD Coin predictions 92% 1 $1.000058 0.01% 0.01% $33 786 650 760 USDC 7 days price change
8 Toncoin (TON) TON Toncoin predictions 86.4% 13 $7.13 -2.95% -1.57% $17 903 663 385 TON 7 days price change
9 Dogecoin (DOGE) DOGE Dogecoin predictions 73.2% 55 $0.122344 -1.78% 14.15% $17 759 171 787 DOGE 7 days price change
10 Cardano (ADA) ADA Cardano predictions 77.6% 36 $0.440835 0.42% 14.99% $15 820 624 845 ADA 7 days price change
11 TRON (TRX) TRX TRON predictions 79.2% 44 $0.133868 -0.20% 2.14% $11 660 500 653 TRX 7 days price change
12 SHIBA INU (SHIB) SHIB SHIBA INU predictions 79.2% 37 $0.000019 -2.98% 14.79% $11 047 738 934 SHIB 7 days price change
13 Avalanche (AVAX) AVAX Avalanche predictions 76% 41 $27.63 -2.12% 7.39% $10 907 302 760 AVAX 7 days price change
14 Lido stETH (STETH) STETH Lido stETH predictions 96% 1 $2 941.39 -0.40% -3.32% $10 258 752 564 STETH 7 days price change
15 Wrapped TRON (WTRX) WTRX Wrapped TRON predictions 94% 1 $0.116354 -0.46% 0.23% $10 171 995 609 WTRX 7 days price change

Be the first to receive Cryptocurrency Price Predictions and Forecasts daily

Get cryptocurrency price predictions, forecasts with analysis and news right to your inbox.

© 2015-2024 Crypto-Rating.com

The usage of this website constitutes acceptance of the following legal information. Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website, including information about the cryptocurrencies and bitcoin is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Crypto Rating shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about cryptocurrencies. The entire responsibility for the contents rests with the authors. Reprint of the materials is available only with the permission of the editorial staff.