ICOs vs IPOs – find all the valuable information you need to know
In the world of crypts, almost nothing can surprise us anymore. Because Initial Coin Offers have become extremely popular and of great importance, we will focus more on them in this text. First of all, what they represent and how they are compared to the Initial Public Offerings.
As you may have heard, ICO is the acronym for the Initial Coin Offering, and it’s the crypto industry’s equivalent of Initial Public Offering. We want to explain each in the most effective way possible to compare these two terms.
Let’s get to know what ICO means, shall we?
What is Initial Coin Offering?
Initial Coin Offering represents a specific event where a particular company sells a new cryptocurrency to raise money. Investors get cryptos in exchange for their financial contributions. The ICO calendar is a handy tool for anyone interested in increasing their profits with this sort of business.
To participate in a single Initial Coin Offering, it’s required that you make the first purchase for more conventional digital currency. In addition to that, you need to have at least a basic understanding of crypto exchanges and wallets.
To sum it up, ICOs are an intelligent way to raise funds for services and products usually related to cryptocurrency. Now let’s get to know what is Initial Public Offering, shall we?
Initial Public Offering – explained
Initial Public Offering or as many of you know it by its acronym IPO, refers to an offering in which shares of a specific corporation or a company are sold to institutional investors and retail investors in most cases. An IPO can be underwritten by one or numerous investment banks, arranging for the shares to be listed on one or more exchanges.
It’s a situation where a private company becomes public by selling its shares on what happens to be the stock exchange. Tremendous amounts of marketing, regulatory requirements, and due diligence are required for private companies to bring their shares to the public.
ICOs vs IPOs – what you need to know
When it comes to comparing ICOs and IPOs, here are the essentials you need to know. The main difference between these two is that investing in an ICO does not secure you an ownership stake in the crypto company or crypto project.
Initial Coin Offering participants are usually gambling that a currently worthless currency will increase in value after some time which will be above its original purchase price. On the other hand, Initial Public Offerings are highly regulated by the Securities and Exchange Commission and other government organizations, while ICOs are mostly unregulated.
Thanks to the lack of regulation alongside decentralization of crypto projects, ICO’s structure can vary a lot. On the other hand, the majority of IPOs are mainly similar. While conservative investors in general fund IPOs, waiting for a financial return, ICOs get funding from risk-tolerant investors/supporters who are eager to invest in something new and exciting.
ICOs are often referred to as “crowdsales” because they provide the possibility of financial gain, which means that they differ from a crowdfunding event.