In this article we are going to have a comparison between ICO in the cryptocurrency world and IPO. In fact, we dedicated this article to the key differences between ICO & IPO.
Generally, The Key Differences Between ICO & IPO is that IPO is for well-settled and well-known companies and organizations. However, ICO is usually for the start-up ones. In order to make it more clear with an example, an IPO is a 40-year old well-settled company with equipment. On the other hand, ICO is an 18-year old computer geek, who is building his new company in his house garage.
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The first company is well-known, has a solid bank account, because running a profitable business. In addition, it has a positive record. The next company, has nothing at all. However, it could become one of the most famous companies and businesses or even disappears in a year.
It totally depends on you to which of those companies you choose to invest in. In fact, you invest to win and you expect to make a profit either investing on the old one or the young one.
The Key Differences Between ICO & IPO; General Requirements
A company has to fulfill number of requirements in order to list in IPO. It has to prove a good track record as well as minimum earnings’ threshold. The traditional IPO issuance usually takes long time to be processed. This is due to the compliance and legal requirements process.
In addition, the company has to declare its intention and publish to the public legally. They also have to release the key information about the company to the potential investors. As a result, for an IPO it’s recommended to have bank accounts, history and a lawyer as well.
ICO is not depended on any regulatory framework as well as legal protocol. Most ICO projects just have a white paper in order to explain their project. However, there are no standards for the white paper. In addition, the white paper doesn’t consider as legal documents in some countries. In simple words, in order to have an ICO, you only need Internet and programmers.
The Key Differences Between ICO & IPO; Investor requirements
The process would be really simple, if, you invest in a company in your country. But, if you are willing to invest in a foreign company, you need a broker in order to do it for you.
Participating in an ICO project is pretty simple. You just need to have access to the Internet. You can easily buy any token of any company from any country. However, there are some exceptions related to U.S regulations. In fact, some of them defined as securities. As a result, those kinds of projects are not available for U.S citizens.
The Key Differences Between ICO & IPO; Investors’ profit from a project
When an investor buys the stock of a company in IPO, it means that they have the ownership of the stake on the future earnings on the company. In fact, they consider as shareholder and receive dividend yearly. This amount depends on the progress of the company in the past year.
An investor also can buy the stock of the company in early days, and then sell it later when the price rises.
In an ICO, when you buy a token, it doesn’t mean that you own the project. In fact, you can buy the token and then sell it later when the price rises. Or you can receive some kind of reward or services from the company according to the whitepaper. However, there is a chance that you lose your money in an ICO investment. If, the company go bankrupt or the project could not become successful. So, It’s recommended searching enough and study about the project before investing in.