IPO or ICO
ICO – the initial placement of coins – works like this: companies creating cryptocurrencies announce that they intend to raise a certain amount, and according to the results distribute the proceeds to investors in the form of tokens. Something like an IPO, an initial public offering on a stock exchange, but there is a difference. We tell you how good an ICO is, how it differs from an IPO and what an investor should choose.
Share in business
With an ICO, in return for your bitcoins and ethers, you get a certain amount of new cryptocurrencies. And, actually, that’s all. By investing in a company, you actually acquire a share in it, and in some cases even a voting right.
No share – no dividends. Yes, sometimes companies refuse to pay dividends, but try to do this only in extreme cases.
Today, almost all new digital currencies are created on the basis of the Ethereum platform. That is, they can offer different opportunities, but they have one essence. Companies can find a completely new niche, create a unique technology and provide people with what they always wanted, but could not get. More importantly, companies are required to license their products and activities, and blockchain startups owe nothing to anyone, so the risk of fraud is high.
Not so long ago, the US Securities and Exchange Commission (SEC) said that companies that receive funds from the sale of digital assets must adhere to federal securities laws. However, this does not mean that any ICO will now be regulated in the same way as an IPO, so the investor will not be able to be completely sure what exactly he is investing in.
Most often, to take part in an IPO, you need to be a fairly large investor or even a whole venture fund. ICO is much simpler: anyone can go to the campaign website and send money to the project.
A lot of information
The topic of cryptocurrencies is very relevant, so you can always find any information about the creators of the project and the rumors associated with it. With an IPO, everything is less clear: yes, before placing on the stock exchange, the company submits official documents, but they do not give a complete picture of the plans and prospects of the business.
Who said that you cannot invest in a new company or in a new digital token at the same time? If tokens still attract you more than good old stocks.