IPO’s vs ICO’s - what’s the difference
Recently, ICO versus IPO is increasingly common. This is largely due to the fact that in general terms the two procedures are quite similar in terms of the layman. However, they differ in many parameters and this comparison is largely inaccurate. First you need to decide what is ICO and IPO.
What is ICO?
ICO is a tool by which young developing companies can sell digital tokens to finance their business processes and achieve other goals.
To run an ICO, a startup prepares a special document - white paper. It regulates the main details of the project, indicates the intermediate goals that need to be achieved, determines the number of tokens issued for fundraising, and describes what percentage of assets the creators plan to keep.
What is an IPO?
An IPO is a tool that allows companies to sell their securities to the public for the first time. Despite the fact that they mostly sell shares through IPOs, companies can also distribute other securities: bonds, futures, warrants, etc.
To run an IPO, a company usually hires several investment banks (underwriters). Further, these underwriters work with the company to understand which securities to sell and how much investment it will attract.
The purpose of an investment bank is to prepare a preliminary prospectus. This document provides investors with information about the company, including the following: a description of the business plan, ownership structure and management; financial documents and strategic initiatives.
After further processing and revision, this preliminary document becomes the final prospectus, which will later be submitted to the Securities and Exchange Commission (SEC), where the IPO application will be formed.
One of the key differences between ICO and IPO is the degree to which they are regulated by existing laws. IPO companies must follow strict rules set by government agencies, and the ICO is not limited to any laws and regulations.
Some analysts emphasize that the lack of regulation carries great risks for investors. While some tokens provide significant returns, others can literally burn investments. As a result, volatility becomes an important characteristic of the market.
Preparing for ICO Investment
Any investment requires preparation. It is worth being especially careful before investing in ICO.
While IPOs sell shares for several specific time periods (windows), some ICOs take only a few seconds. Brave developers collected $ 35 million in less than 30 seconds, and the Esports FirstBlood platform generated $ 5.5 million in 58 seconds.
In order to take part in an IPO, you just need to contact your broker.
To participate in the ICO, you need a cryptocurrency wallet that meets the necessary standards. Then you will need to transfer a certain number of bitcoins or broadcast (the second is used more often) to the appropriate address for the acquisition of digital assets.
Although the abbreviations ICO and IPO are quite consonant, the phenomena behind them are very different from each other.
In order to organize an ICO, it’s enough for a company to write a white paper and create a website with the necessary information to purchase. An IPO requires a long, hard work with investment banks and government institutions.
Another important difference is the legal status of the two sentences. There are many norms and restrictions for IPO, while the ICO is practically not regulated.
As always, the most important stage of investment is preparation for them - no matter if it is an ICO or an IPO. Learn what you are getting ready to invest, and carefully analyze the information.
Nowadays, there are lots of ICO on the market. However, one cannot trust all of them. Open Packaging Network is an exception from the rule.
The Open Packaging Network (OPN) is a fair trade center where premises are provided in accordance with promises and agreements between buyers and sellers, an open platform for online reliable, fast and transparent transactions. Sellers and buyers, indeed, can publish housing and the products that they provide or need, interact with each other, receiving from the counterparty. The ecosystem is designed to act as a one-stop solution for all related packaging facilities. In addition to accessing a wide range of products, better prices and various integrated and secure premises, interested parties can additionally take advantage of these facilities with the help of OPK tokens. Stay tuned with our Telegram channel: https://t.me/openpackagingnetwork