The difference between initial public offers (IPOs) and initial coin offerings (ICOs) can be as night and day are between night and day. Businesses that embark on such fundraising campaigns might do so at a variety of different stages in their lifecycles, and the safeguards offered to investors can also change significantly. There are some differences between the two, and we’ll go through them here so that you can make an informed decision the next time you’re looking for a significant opportunity.


1. The maturity of the business

Many of the firms that seek to go public through an initial public offering are already known brands that require capital in order to embark on a rapid expansion strategy. Squarespace, ZipRecruiter, and Coinbase are just a few of the companies that have successfully conducted an initial public offering (IPO) in 2021, according to a quick search. Each of these businesses has a certain level of public recognition — in fact, you may already be familiar with their products. Most initial public offerings (IPOs) already have goods and services available for purchase, and they have likely been in business for a significant amount of time. The year 2010 saw the launch of ZipRecruiter, whilst Squarespace was established in 2004.

Initial coin offers (ICOs) are frequently launched by start-ups that do not have a track record to rely back on. In many cases, they are looking for funding for a concept, a product, or a service that they want to develop with the support of an investor, and they want to raise money for it. An eye-catching website featuring images of prototypes, as well as a white paper that outlines the project’s market research, milestones, financial predictions, and overall budget, serves to communicate their vision.. There have been numerous successful initial coin offerings (ICOs) that have raised tens, if not hundreds of millions, or even billions of dollars. A few, like NEO and Ethereum, have gone on to establish themselves as pillars of the cryptocurrency and blockchain industries, with token prices skyrocketing in value significantly from their inceptions. Other initial coin offerings (ICOs) have come to a screeching halt, either as a result of an exit scam or as a result of the token price collapsing.

When it comes to initial coin offerings (ICOs), there aren’t many investor safeguards available, partly because they aren’t regulated in many jurisdictions. This means that investing in one of these projects from the beginning carries a high level of risk. Because of the way initial public offerings (IPOs) are regulated by the Securities and Exchange Commission of the United States, they are a completely different animal. Before an initial public offering (IPO) can take place, a prospectus document must be published that contains comprehensive information on the company’s present financial situation as well as how any funds acquired through the IPO would be used.

2. The intended audience


Although initial coin offerings (ICOs) may specify a minimum amount that a potential investor can donate to their project, these fundraising campaigns are frequently available to anybody who wishes to participate. In order to be eligible, investors normally need to go through a few checks. This is in stark contrast to initial public offerings (IPOs), where such chances are often reserved for high-net-worth people, experienced traders, and financial institutions.

3. The manner in which they are traded

In the crypto business, initial coin offerings (ICOs) are common, which means that tokens are frequently purchased using popular digital currencies such as bitcoin and ethereum. In many cases, a crypto start-up may seek to list their project on a cryptocurrency exchange, which will allow tokens to be purchased, sold, and exchanged into other cryptocurrencies at any time of day or night.

The shares of a publicly traded firm are listed on stock markets such as those in New York, London, Hong Kong, and Paris following the completion of an initial public offering (IPO). In the financial world, payments are made in fiat currencies, and clearing and settlement mechanisms allow trades to be completed in a matter of seconds.

4. Tokens versus common stock

Tokens versus common stock

When an initial coin offering (ICO) is completed, investors in a cryptocurrency start-up are typically given tokens in exchange for their investment. These tokens can be used for a variety of different things. While in certain situations, they will permit the holder to use a service on a subscription basis, they may also be used solely as an investment vehicle, with the investor seeking to hold on to the token until its value increases significantly.

In some ways, shares issued through initial public offerings (IPOs) are identical to common stock. Typically, investors expect that the security’s value will increase from the price at which they purchased it, resulting in a profit for them on their investment. However, there is a significant distinction between these shares and those issued in initial public offerings (IPOs). The holders of shares in a publicly-traded organisation may be eligible for dividends (cash payments made from profits created over a specified period of time), or they may be granted voting rights that enable them to influence the direction of the organization’s future operations. A guarantee that investing in an initial coin offering (ICO) would result in a claim to a portion of future profits does not exist. As a result, it is critical to read the fine print before making an investment choice.

5. There is a lot of volatility.

Price fluctuations in an asset that is erratic are typically tied to the amount of liquidity in the asset. As a result, the speed with which they can be purchased or sold on the open market. Because of their high reputation and the long-standing character of international stock exchanges, it can be relatively simple to trade shares following an initial public offering (IPO). As a result, the large number of buy and sell orders that are placed on a regular basis can help to absorb abrupt changes.

Because there are fewer people eager to purchase or sell cryptocurrencies and initial coin offerings (ICO) tokens at any given moment, they are considered to be part of a “thin market,” which means they are subject to higher levels of volatility. Because such tokens do not trade on a stock exchange, which has more rigid standards and higher levels of transparency, they are more prone to “pump and dump” schemes, in which prices are artificially inflated before being suddenly deflated and collapsing again.

Can ICO replace IPO?

The process of publicly providing shares of a particular firm is known as an IPO (Initial Public Offering), while the process of publicly offering cryptocurrencies is known as an ICO (Initial Coin Offering). The fastest way for businesses dealing with cryptocurrency and blockchain-related technologies to raise the capital they require is through this method. As the popularity of initial coin offerings (ICOs) grows, it is possible that they will eventually replace initial public offerings (IPOs) in the future. However, there are still many factors to consider before this occurs.

In conclusion, I would want to say

Both initial coin offerings (ICOs) and initial public offerings (IPOs) have advantages and disadvantages. Offering initial coin offers (ICOs) allows potential enterprises with no prior track record to raise much-needed capital. They will be able to access these assets more rapidly, and investors will have fewer obstacles if they choose to participate. Businesses and investors alike benefit from the regulatory stability provided by initial public offerings (IPOs), which are also less prone to price volatility and fraud than other types of securities