INITIAL PUBLIC OFFERING: IPOs have a very old and interesting beginning. An IPO is a concept of inviting public investment for a company when it launches public issues. This apparently makes the company, out of the boundaries of being just a “limited” company and opens the doors of ownership and profit share for people who are not “actively” involved in the operations of the company. These “shareholders” are mostly no decision makers and are just the equity holding individuals or companies. They are neither employed nor sponsored by the company. They could get benefited by securing the shares for longer and could wait for the exponential growth in the cost of shares, it could, however, go in an opposite direction too if the calculations don’t go according to the plan expected.
INITIAL COIN OFFERING: ICO, however, is more of an advanced version of an IPO, several glitches are resolved and removed, the boundaries of practical and materialistic objects and planning have been overcome and projects introduced have been focused upon, in an ICO. It is about “crowdfunding”, focusing towards “cryptocurrency”, which is used as a capital for startups. These startups are mostly owned and operated by the youngsters, who have new and innovative ideas for the business. Before or after the “tokens” become “coin” and come to the exchange, a lot of procedures have to be taken care of. People who buy tokens could sell the stakes, any time they wish to, even before the “exchange” phase comes. After the “token” comes to exchange and becomes a “coin”, it’s free from the introducer and completely comes to the “demand and supply” roller coaster”.
History: The Similarities and Differences.: there are several similarities, but significant differences too, when it comes to comparison of IPO and ICO. Historical evidence could be analyzed and studied for a better comprehension of the relativity, requirement, and longevity of the practicality of both, in today’s economic and technical world.
Initial Public Offering:
The first IPO was introduced during the reign of Roman Republic (509 BC – 27BC) when Publicani, those were the independent legal bodies, whose ownership was distributed into Partes (shares). These Partes were evidently sold to public investors and it was an open market, with fluctuating prices of Partes. There used to be spectators and it is not much different than the current scenario of share markets we can see these days. The existence and importance of Publicani were lost after the Roman Empire rose in 27 BC and so had the oldest stock exchange existed.
The first “modern IPO” occurred in 1602, when VOC (Dutch East India Company), opened a public issue for the company in order to raise funds. The Dutch East India Company was raising funds for the expansion of the worldwide business and the establishment of colonies in different parts of the world. The public was made a part of the endeavour and was offered profits with the growth of the company. VOC became the first company to introduce shares and bonds to the General public. So VOC officially could be credited as the first ever company to be listed on an official stock exchange.
During about the same time frame, in the United States, the first IPO was the public offering by Bank of North America. This private bank was adopted by The Confederation Congress, in may 1781, and was opened in Philadelphia, on 7th January 1782. The first IPO issued by Bank Of North America was issued in 1783.
Initial Coin Offering:
Mastercoin initiated the first token sale or “Initial coin offering” in July 2013. It started the trend of accepting legal tender (govt. approved currency) or exchangeable coins in order to buy a token.
ETHEREUM raised money in 2014, by a token sale, at a collection of 3700 Bitcoin in the first 12 hours, which was equivalent to $2.3 million at that time.
Karmacoin initiated a token sale in April 2014, for Karmashare project.
The trend, however, started in the year 2017, when ICOs and token sales became popular and there were significant numbers for the listings, advertisements and token sales till July 2017.
Now since it is a recently introduced thing and has not been followed by many (considerably), it doesn’t carry a very long history to be told about. Still, considering the popularity and growth this phenomenon has gained in last less than a decade, has made it an unavoidable chain of events.
It has lately attracted the consideration and interest of not only the youth with innovative ideas and startup plans but also established names and successful business around the world. One of the most relevant fundamental behind launching a token sale, or offering a coin is, how you back it up with the future plan about it, and how you represent it with the vision, which could be shared and felt by the general audience.
As much one could generalize the concept behind the coin and make it connected to the maximum number of “kinds” of people, more is the probability of its, touching the hard cap sooner. (Hard cap is the maximum number of tokens to be distributed during an ICO).
Marketing differences, traditional similarities:
Although both of these are different in terms of the business generation, the public participation and the probable “kinds” of people interested in either of them respectively, they have multiple traditional similarities.
1) ‘KIND’ of people, who are monetarily progressive, up to date on the market trends and are ready to be benefited on the cost of risk involvement, are the “pro interested” people who get into IPOs or ICOs.
2) Open for everyone, both of these present and create no restrictions at all, when it comes to investment, for people. IPOs, however, are missing the leverage those could be given in ICOs, for overseas customers.
3) A ‘PROSPECTUS’ in an IPO, which describes the shareholding, mutual fund forecast, company’s plans and IPOs vision at a glance, becomes a ‘WHITE PAPER” in an ICO, which describes the ICO’s specifications, the unique selling points of the token, the announcements and initial plans of the ICO, and the advanced roadmap for the whole ICO period.
4) Shares or bonds could be bought or sold, anytime. There is no time/person bound activity which makes it a nontransferrable entity. Throughout the IPO, a person could buy it from any other person, (if not directly from the introducer). This has been a practice in both, IPO and ICO respectively. In terms of profit, people do internal selling/ buying.
5) An IPO normally has been introduced by an already established company or firm. It generally doesn’t get connected or related to an individual. On the contrary, an ICO gets introduced by a sole responsible person or individual. The marketing, trust building and vision sharing happen simultaneously, while the ICO gets launched and the ICO period goes on.
6) ICOs and IPOs are different in terms of how they present themselves in front of the investor community. An IPO has to build the trust about the product and related plans have to be shared with a long-term stability factor. IPO is a completely controlled phenomenon and the introducer remains responsible for the cost and price of the share/bond forever. On the contrary, in an ICO, as soon as the “token” becomes a “coin”, the introducer’s control is considered to be done and the price varies with the “demand and supply” fundamentals.
7) An IPO is about a new project/plan or a new venture to be started that has a foresighted execution strategy and calculations about pros and cons, if then else considerations and worst case scenario fail-safe plans for everything (almost). Nothing can, however, predict the market deployment of an IPO, and IPOs do fail too. An ICO however, is just to collect the capital for some other business, which has nothing to do with the purpose of the coin(mostly) and is used just to generate the required fund for a business. The introducer could be a youngster, a tech geek or a not so known programmer. Once the token becomes a coin, even the investors are not keen to follow him for future, as they have already been benefited throughout the ICO period and even afterward.
THE DECISION IS YOURS:
An ICO is the progressive era’s choice, things go fast, no big names, no brand connection and no long-term investment plans and equally awaited returns. The option to chose an ICO certainly is quick benefit rewarding, provided you are well versed with the quality of a token’s projections and you could be certain (even the slightest ) about the future of the token’s destiny in the market. Just by giving some extra time to a so-called “geek” next door, you could learn all about it. Then you could start re-defining your fortune.
An IPO is a way traditional way of “fetching fruits” from someone else’s tree, while you have been watering it when it was a sapling. It is equally risky, uncertain and even the projections and predictions could not be defined well. Yet it has been a successful way of making hundreds of people, millionaires. It is, however, quite slow of a process and that “feeling of awe” remains for a very long period of time, compared to that in an ICO.
One has to decide on his own about where to go. Considering everything, considering the fact that people are still investing in both. They are getting richer. They are sharing their success stories with you. Which way would you like to go now?