Difference between IPO and ICO | The Ultimate Face-Off
There are various distinctions between ICO and IPO. As ICO market grows, these differences are bound to fade away.
- Equity sale through IPO gives shareholders right to vote and claim in company’s equity whereas in the case of ICO. the token holder does not have any voting power or claim on company’s equity. Investors have a claim over the usage of the token.
- ICO are generally issued by startups and newer firms to raise working capital whereas IPO typically issued at a later stage by the companies to raise long-term capital.
- IPO’s are highly regulated events and safer than ICO, that is self-regulated. Whilst IPOs are highly regulated, there have been a countless number of scams, money laundering cases.
- There is a close connection between exchanges and companies. It is mandatory for an IPO to be listed with an exchange to sell shares. ICO, on the other hand, are not obligated to list on any exchange,
- Allocation of shares under IPO is much more sophisticated than ICO. Banks provide guarantee aa an underwriter to buy shares that investors fail to buy. There is a large number of beneficiaries like the exchange, brokers, underwriters in case of IPO. ICO reduce middlemen and their margins.
- The process of IPO is very lengthy and time-consuming. It takes around 4-6 months to get the approval from the regulatory authorities. The duration of this process under ICO is short and simple
Broken down into it’s simplest comparisons, an ICO has two significant differences to an IPO. In an ICO you do not have invested shares in the future of the company who holds your investment. An ICO must be related to the blockchain and has different regulations regarding listing on some form of exchange. As for me I prefer ICO for investing. You can read many other ICO comments here www.crypto-rating.com/ico-reviews/
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