ICO vs IPO: Major differences

Throughout the history of cryptocurrencies and blockchain technology, we have been introduced to numerous new processes and terms such as coins, tokens, presale, crowdsale, decentralization, etc. Some of the most common terms and processes that gained the most attention to us and to many other companies and projects are ICO and IPO.

We hear a lot about ICO and IPO these days. Although the names ICO and IPO sound similar and many people think that their purposes are similar as well, there are many differences between them.

The Initial Coin Offering (ICO) is a process brought to life by the cryptocurrency innovation. It is a way of crowdfunding for the startup companies, which includes creating and selling tokens to fund the start and the development of a project. ICOs are related to the blockchain technology.

The Initial Public Offering (IPO) is a well-established process leaded by a private company in order to expand and become publicly traded. It involves some formalities in the duration of the process. IPO refers to the public sale of the shares of a company, with the goal of collecting funds for development.

What are the major differences between ICO and IPO?

Strategy

The main strategy of an ICO is to raise funds for the project and enter the market, and the ICO is usually performed by the startup companies. However, IPO is usually performed at a later stage when a company is financially stable and wants to expand and develop to the public. Its raised capital is used for the future expansion projects of a company.

Documentation

When a company wants to issue an IPO, it must create a legal document called prospectus. This document is a legal declaration that has to include key information about the company and the IPO, and must meet some standards of transparency. On the other side, ICOs are not limited with any legal document. They have a document in the form of a white paper where everything about the project and its purpose is explained. But, it is important to point out that ICOs are not obligated to create a white paper, while IPOs must have the prospectus for successful operation.

Credibility

There are some requirements that a company must accomplish in order to list its shares via an IPO. This involves having a track record of earnings, and it should be confirmed by a professional accounting firm. In the ICO process, companies do not have to have a track record or any regulatory framework. Most ICOs have just a white paper that is not necessary.

Duration

The IPO process is a long process that can take up to 6 months. That is because of the requirement of legal processes. But the ICO process is much shorter. The duration of an ICO depends on the nature of the project. When a company issues white paper and a smart contract, they can start with the crowdsale. The duration of a crowdsale depends on the project and its maximum hard cap, and it usually takes up to 1 month.

Target group

IPOs are oriented only to the institutional investors such as banks. There is a little part of the whole process that is oriented to the retail investors. On the other hand, ICOs are opened for anyone. All you need to have is a currency of Bitcoin or Ether which you will convert into the token of the particular ICO.

While ICO and IPO sound as a similar processes, the reality is different and they are extremely separated. However, both of them are well-promising processes that can lead a company to success.

Our company Energy Premier is currently launching an ICO. Energy Premier is an advanced blockchain-based electricity trading platform aimed to the suppliers and consumers of electricity. The goal of Energy Premier is to give the power over energy back to the people through blockchain. Our platform enables direct access to the retail energy market to suppliers and takes out distance as a limiting factor to trade, which then results in lower prices for the consumers. It is the first platform that provides direct access to the market for all energy retailers.

The presale has already started and the crowdsale starts on May 15th. You can easily participate and get whitelisted on https://tokensale.energypremier.com/

Moreover, we have launched a Bounty Program to spread our community and reward our participants. Check it out here.

Thank you for reading.Subscribe to the largest electricity bidding platform and keep up with our updates. Participate in discussions on our Telegram channel as well: https://t.me/joinchat/Hq0j1hDxZ3eRKFNo5f7oTwJoin the pre-sale and crowdsale here: https://tokensale.energypremier.com/

ICO vs IPO: Major differences was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.

Publication date: 
04/24/2018 - 15:57
Disclaimer

The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.