Section 4: ICOs Vs IPOs: What is the difference?
At the face value, ICOs and IPOs may sound familiar, especially in terms of their use for raising capital by companies, but they differ significantly in terms of their mechanics and regulatory frameworks.
IPOs are organized by established private companies that have proven track records. ICOs, on the other hand, are organized by startups to raise seed money, and in a majority of the cases, these startups donít even have a ready product. They conduct ICOs based on their product idea and utility, described through whitepapers.
IPOs have to stick to strict regulatory guidelines and obtain regulatory approvals from different authorities such as the Securities and Exchange Commission in the US. ICOs, on the contrary, are conducted on decen-tralized platforms and are not even restricted by international borders.
In terms of returns, IPOs offer dividends to their shareholders, whereas ICOs offer a promise of increased value in future. Several companies conducting ICOs allow tokens to be used for the purchase of their services. Some cryptocurrencies have received worldwide acceptance, and are now being used as in-app currencies.
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