How is ICO different from IPO?

in #ico7 years ago

There are indeed some parallels between the concepts of Initial Public Offering and ICO. However, there are several key differences.

For one, a company’s shares, released during an IPO, always denote a share of ownership in the respective company. This is not, by default, a case with crypto-tokens that are sold to the public in an ICO. Crypto-tokens can be used to transfer voting powers - a larger share of tokens giving more voting power - in some projects, but more often those tokens are just that - units of currency that you can send to other users and exchange for other currencies.

The other crucial difference is that IPO’s are heavily regulated by the government. This requires a partaking company to prepare large amounts of paperwork before releasing its shares. It also implies severe consequences in the case of non-compliance. Conversely, cryptocurrency crowdfunding is a new scene, largely untouched by government regulation. That means that any project can launch an ICO at any time with little preparation and any person can take part in it and contribute their money, no matter what country they are from. This liberal environment carries both new opportunities and risks when compared to the more conservative IPO’s.

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