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Initial Public Offerings (IPOs) vs. Initial Coin Offerings (ICOs)

San Francisco, California, July 26, 2018 — RocketSpace Business Center. This event was especially useful for ACG (Association for Corporate Growth) members, venture capitalists, and businesses interested in raising funds through an ICO.

The competition between initial coin offerings (ICOs) and initial public offerings (IPOs) is still on. But which is the superior option? Answers to the following questions were offered at a recent meetup:

  • What is the difference between an initial coin offering (ICO) and an initial public offering (IPO)?

  • What are the ICO and IPO business models?

  • What are the operating costs and expenses?

  • What is the significance and relevance of initial coin offerings (ICOs) in today's world?

  • What advantages do ICOs have over IPOs?

  • What are the rules governing initial coin offerings (ICOs)?

Speakers of Note

  • Mark Stoner, director of business development and advisor

  • Deloitte's Robert Massey is the moderator.

  • Propy, Inc.'s CTO, Alexander Voloshyn

  • Tierion's CEO, Wayne Vaughan

  • Mitzi Chang – Partner at Goodwin's Technology Companies & Life Sciences Steve Goldsmith – VP of Marketing, Sanovas Group

Audience You're After

  • ACG members

  • the venture capital community

  • startups looking to raise money from an ICO

  • The general public

Summary of the Event

The term ICO stands for Initial Public Offering and is an abbreviation. There are some similarities between IPOs and ICOs, but there are far more distinctions.

An initial public offering (IPO) is a statutory procedure for issuing securities of a specific legal organisation. At the time, there is no direct legal regulation of an ICO anywhere in the world. Tokens can give its owners with a wide range of privileges.

The key similarity between ICOs and IPOs (in the broad sense) is that both operations aim to raise capital for the development of a project or company.

The primary difference is that initial public offerings (IPOs) are governed by strict legal guidelines. The shares are sold as objects of rights in the IPO process, and their legal status is described in full by legislation. In terms of the ICO, there is a complete legal vacuum at the legislative level (at least for the time being), and as a result, ICOs implement (place) rights objects (tokens) with various economic specifics, the legal nature of which, at least among the general public, raises more questions than answers. More information about ICO legality and compliance can be found here.

Tokens provide far more economic potential than stocks. An IPO is a fairly expensive transaction, but even startups can participate in an ICO. Due to regulators' rigorous oversight, the possibility of presenting fake ideas (businesses) to IPOs is almost non-existent. On the contrary, because there is no proper regulation in this field, the danger of receiving tokens from fraudulent projects arising from ICOs is very significant. As a result, ICOs have been "blacklisted" in China as a method of obtaining project funding.

ICOs do not need to be regulated as strictly as IPOs. To avoid risks, the project's local documents should include mandatory identification of responsible personnel as well as stringent liability for violations of public standards and commitments to cryptography participants (white paper, etc.).

Who are the participants in initial coin offerings (ICOs), and what is the reason for their increasing popularity?

In comparison to IPOs, the more democratic procedures for ICOs frequently involve “smaller” actors. There are no investors or issuers equivalent to Vanguard, and no issuers comparable to Amazon. Fintech startups, which are high-tech enterprises whose business is sometimes only at the stage of a potential idea, are more likely to participate in ICOs than large companies with a good reputation. The majority of people who invest in ICOs are also enthusiasts of other types of crowdfunding.

The Ethereum cryptocurrency is the most well-known example of a successful ICO (Ether). In 2014, the corporation issued tokens to anyone who wanted them, and after a while, the value of these tokens skyrocketed. The ICO raised $18 million, but the currency's market valuation today stands at $46 billion. According to Wikipedia, the technique for soliciting cash for Ethereum is known as crowdfunding (in the classical sense), but not for initial coin offerings (ICOs). For the year 2014, a total of $31 million was raised for various projects. 2016 was the highest-earning year, at $210 million.

Conclusion: ico vs. ipo

The coin implementation concept is currently in its early stages of development. We shall witness even more advancements in the coming future. Industry analysts are optimistic about the future of ICOs right now.

Participating in ICOs will become more difficult, and only professional teams will be able to do so. As a result, the total number of ICOs will decline, but the percentage of reliable and profitable projects will increase.

As a result, both in terms of the development of the crypto business and the position of investment, ICOs will achieve a new, more professional level.

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