IPO vs ICO
With the advancement in technology, the entrepreneurial world has welcomed a new form of investment - Initial Coin Offerings (ICO) which comes in the form of cryptocurrency tokens. This also brings up the dilemma of whether to invest through ICO or invest using the conventional form of Initial Public Offerings (IPO).
Both IPO and ICO are essential tools for the growth of a company. Here are a few important distinctions that can be drawn between IPO and ICO:
Procedure For The Organisation
For IPO, there are a number of legal requirements which have to be fulfilled. Only after completing all those formalities, a company can list its share. So these requirements include the total earnings of the business, its goodwill and its total sales. This also includes the track record of all work done by the organisation. The company should also be transparent enough in sharing its intention for issuing the shares to the public. The company must give out the details about what work it does and also make their financial records available if necessary. They should provide the investors and shareholders with all the important information that they would require while making a wise decision.
The process for ICO is quite short and precise. This is mainly because ICO does not have to adhere to any specific regulatory framework of any body. Hence, they do not have to provide all their information to the investors. They may not even have a properly accounted track record. They just have their project on a paper. This process is thus very simple, and easy.
Procedure For The Investors
As an investor, the procedure is quite simple for both ICO and IPO.
For investing in the IPO of a company established in your own country, you can directly buy the IPOs from the company. However, for investing in an IPO in another country, you often have to go through more complex legal requirements, and it also may require you to hire a broker for making the deal because it is difficult to do it on your own.
As for ICO, you can buy any number of tokens from any company in the global market, over the internet. In this, you are not required to have any major legal requirements, or complex procedures.
Which To Choose?
When it comes to choosing between between IPO and ICO, you can consider a few pros and cons that each of these have.
● For an IPO, the process may be a bit complex. However, it is legally more secured because it is regulated by a legal body.
ICO, on the other hand, is very simple to acquire, but it involves higher risks because it may not be so secure as it is not governed by any regulatory body.
● When we talk about the ownership of the investment, an IPO provides more ownership to the investors.
As for ICO, they do not grant any ownership to the investors.
● About reaping benefits, IPO does not give immediate benefits. The investment is not so quick and you cannot trade it off very quickly, as compared to ICO.
For ICO, you can reap immediate benefits and you can trade it off as frequently and as quickly as you would like at a very smooth pace.
● When it comes to security of investing, both of these are not completely secure.
When it comes to IPO, it may happen so that the company may go insolvent. And so, you may not get your invested money back.
ICO is not secure because it is not legally monitored.
IPO and ICO both involve financial risks and so choose responsibly and wisely!