ICO vs IPO: How Do They Differ From One Another?Jun 28, 2017

ICO vs IPO: How Do They Differ From One Another?

Some people often associate IPO with ICO due to the similarities to one another. However, there is a significant difference between ICO and IPO.

Some ICOs are similar to how cryptocurrency work while an IPO works like a fiat currency. An ICO is decentralized while an IPO is centralized.

What are an IPO AND ICO?

An IPO or initial public offerings is where a private company is offering its stocks to the public. An IPO is common among startups or young companies like Bitcoin casinos that are looking for capital for expansion. Large companies will also use IPO if they are looking to make themselves publicly traded.

How is ICO different from IPO?

In an ICO, a project or company will sell tokens to investors or anyone else. Tokens are the cryptocurrency or are money that has the backing of a blockchain. Most of the tokens that an ICO sell are pre-mined before the campaign. No one needs to mine the ICO to produce more tokens in the future. This is a contrast comparison to Bitcoin where miners are still producing the cryptocurrency to this date.

The team behind a project or company will set a time period as to when the tokens of an ICO becomes available. To encourage early investors, the team will set the price of its token low while gradually increasing the token price as the campaign continues. The team uses the funds from an ICO campaign to further develop the project or blockchain protocol.

How is an IPO different from ICO?

One of the main differences between the two is how IPO undergoes the regulation process with the country it is operating in. This includes filing a registration statement with the financial regulation office of the country. Many ICO campaigns do not have to go through the same regulation process.

Another difference is how an IPO and an ICO runs. IPO companies will use a traditional corporate structure for its business. In an ICO, the project or DAO will run its business according to how the creator programs it. ICOs such as the DAO.Casino make use of Ethereum smart contract with its blockchain protocol.

ICOs are not restricted to just cryptocurrency blockchain technology. Other ICO companies may have the same corporate structure as an IPO.

There is also a difference with the transparency for both IPO and ICO. To release the financial data of an IPO company, the company must do so in accordance with the stock exchange regulations. On the other hand, anyone can access the financial data of an ICO project or company.

Because an ICO is decentralized, investors or those who brought the token can have a significant part in the decision making of a project. In contrast to the centralized IPOs, the CEO, the board of directors or important figures of a company are the only ones who can make the decisions in the company.