What is the difference between initial public offer (IPO) and the initial range of coins (ICO)? Apparently, quite a lot. While the ICO, and the IPO pertain to the public sales, the assets they represent are radically different from each other in their characteristics.
What is ICO?
ICO is a tool through which young developing companies can sell digital tokens to Fund their business processes and other objectives.
To create a startup ICO prepares a special document — the white paper. He reglamentary basic details of the project, identifies intermediate goals to be achieved, determines the number of tokens for fundraising, and describes what percentage of assets the creators plan to keep.
What is IPO?
IPO is a tool that allows companies to sell securities to the public for the first time. Despite the fact that mainly using the IPO to sell the shares, the company may also distribute other securities: bonds, futures, warrants, etc.
To hold an IPO, a company usually hires a few investment banks (underwriters). Further, these underwriters work with the company to understand which securities need to sell and how much investment it will attract.
The aim of the investment Bank to prepare the preliminary prospectus. This document provides investors with information about the company, including the following: description of the business plan, ownership structure and management; financial documents and strategic initiatives.
After further processing and reviewing this preliminary document is a final prospectus, which will later be submitted to the Commission on securities and exchange Commission (SEC), where request will be generated for an IPO.
One of the key differences between ICO and IPO is their degree of regulation of existing laws. Companies conducting an IPO must follow strict rules established by state authorities, and the ICO while not limited to any laws and regulations.
Some analysts emphasize that the absence of regulation carries heavy risks for investors. While some tokens provide significant profits, while others can literally burn investment. As a result, the volatility becomes an important characteristic of the market.
Investors have no legal means to recover funds lost due to ICO.
Preparing for the investment in ICO
Any investment requires preparation. You should be especially careful before investing in ICO.
While in IPO shares sell out within certain time intervals (Windows), some ICO takes a few seconds. The developers of the Brave raised $35 million in less than 30 seconds, and platform Esports FirstBlood raised $5.5 million in 58 seconds.
In order to participate in the IPO, you just need to contact your broker.
To participate in the ICO, you will need a cryptocurrency wallet, to meet the required standards. Then you will have to transfer a certain amount of bitcoins or ether (the second is used more often) on the appropriate address to purchase digital assets.
Although the acronym ICO and IPO quite in tune, behind them the phenomena are very different from each other.
To organize the ICO, enough to write a white paper and create the website for purchase information. For IPO requires long painstaking work with investment banks and state institutions.
Another important distinction in the legal status of the two proposals. For IPO there are many rules and restrictions, and ICO is almost not regulated.
As always, the most important phase of investment is to prepare for it — whether ICO or IPO. Learn what you are prepared to invest money, and analyze information.