ICO vs IPO
The First IPO was issued in 1602. In IPO a private company is offering its stocks to the public that allows companies to sell securities to the public and get investments.
First ever ICO was issued in 2013, that is Master-coin who raised $5M. ICO is a source of raising capital for the start-ups. Corporate or individual investors can invest money to buy tokens of any company if they are satisfied with the programme.
Why are tokens better than shares?
- Well, tokens are created by the smart contract which is a code & is completely calculative. These cryptocurrencies are highly secured and have many inbuilt functionalities like profit distribution, minting, token burn, etc. These tokens can also be used as currency and can be of great utility in the project. But in IPO shares of a company are provided which have no such functionalities and are stationary.
- In ICO, tokens are set forth with some hard cap & soft cap limits.
Hard cap means the company won’t raise more than this limit.
Soft cap means the company needs minimum this much amount to function and in case if this limit is not reached then all money will be reverted to investors automatically. Therefore, we can say project who have reached their soft-cap are promising projects and even if you made mistake in investing your money in the wrong project, it will be reverted in your account automatically which is not the case with IPO. So, my view says ICOs are more secured.
Why ICO is a revolution to make world smart?
- In ICO listing, stock exchange is not required but in IPO it is mandatory.
- IPO is for big companies where companies are already doing well and ICO is for promising ideas as well as for big companies. ICO gives the opportunity to investors and entrepreneurs to grow and make the world smarter with technology instead of traditional companies growing bigger in a traditional way with no new research and ideas. ICOs are the opportunity to invest in implementing new ideas which can change the world completely in better and advanced way.
- Currently IPOs are highly regularized and have a lot of formalities which is very difficult to be fulfilled by start-ups as well as novice investors. While ICOs are easy funding resource for promising start-ups and investors can buy tokens of any value which can have several utilities too.
- To hold an IPO, a company usually hires several investment banks, which is called as underwriters. Next, these underwriters work with the company to get a better sense of how much the IPO will raise and what kinds of securities will be sold, which is not the case with ICO.
- It is only possible to expect exponential growth in ICO investment in a minimum time of minutes but that is not at all possible with IPO.