What is The Difference Between Initial Public Offering And Initial Coin Offering (IPO vs ICO)?

Initial Public Offering (IPO) and Initial Coin Offering (ICO) are both popular ways that used to raise money for a new cryptocurrency project or helping a company grow. They are similar but essentially they have something different.

Definition

  • Initial Public Offering (IPO) is a process by which a privately held company becomes a publicly traded company by offering its shares to the public for the first time.  An IPO is common among startups or young companies that are looking for capital for expansion and large companies will also use IPO if they are looking to make themselves publicly traded.
  • Initial Coin Offering (ICO) is an event when a team releases its own cryptocurrency  in exchange for money, typically Bitcoin, to a community of developers and early adopters with a purpose of funding a blockchain related project. The term ICO has gained popularity lately in the cryptocurrency environment. (More upcoming ICOs information is available on ICOHoo website https://icohoo.com/)

 

Authority

  • An IPO gives you ownership of the company based on the number of shares acquired. Decision making in IPO companies are centralized with the CEO.
  • An ICO may only give you rights of a particular project, not the ownership of the company. Decision making for ICO companies is decentralized, giving the investors a decision making position.

Preparation

  • An IPO is heavily regulated by the government. So before an IPO is launched, it requires the company to prepare large amounts of paperwork before releasing its shares. It also implies severe consequences in the case of non-compliance.
  • An ICO is untouched by government regulation. It 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. It brings more new opportunities to investors, but also with more risks.

Tax

  • Companies launched by way of an IPO must pay taxes, with investors having to pay capital gains tax.
  • For ICOs, the company may not be subject to direct tax, only the investors are required to pay capital gains tax.

How to Run

  • IPO companies will use a traditional corporate structure for its business.
  • In an ICO, the project will run its business according to how the creator programs it.

Although ICO is often compared to IPO for stocks, you should realize they are not the same things. Whether you are going to participate in an IPO or ICO, do not forget to do some researches first before you make a decision to avoid being scammed.

ICOHoo – ICO Calendar&List:  https://icohoo.com/

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