IСO (Initial Coin Offering, which means the primary distribution of coins) got its name after the IPO (Initial Public Offering — the primary public placement of shares). This is logical because ICO and IPO have much in common, although there are differences between these forms. That's why there is a question - where is it better to invest in terms of profitability and safety? To get the answer, let’s compare ICO and IPO.
The main common feature of ICO and IPO is that in both cases, producers or developers attract investor’s funds for the development of their product.
ICO raises funds through selling the internal cryptocurrency - tokens. Collected money are spent on the implementation of the ideas and the development of the project.
Investors buy tokens in anticipation of its price growth, which may increase in case of success of the project on the crypto market.
IPO is carried out by companies that need money, for example, to improve the product, to expand the network and so on. In the process of IPO, the company puts shares on the market. Investors buy shares, their money are spending on the above goal.
ICO and IPO have similar characteristics
Both models are a type of fundraising — attracting funds from the outside for the development of the project. Both tokens and shares can be a speculative instrument on the stock exchange. Both tokens and shares investor can sell tokens or shares to return his money and make profit.
Yet there are noticeable differences between these models:
1.Often the aim of the ICO is to attract money to the idea, the product might not exist yet. IPO is carried out by officially registered companies that have their own product.
2.ICO offers tokens that in future might be spent as a currency. This happened before, for example, with Ethereum, which at the beginning of its existence was an ICO token. IPO only offers shares that cannot be used in any other way.
3.Tokens usually do not assume the ability to receive dividends, nor do they give the owner right to make decisions. The owner of the shares, acquired in the process of IPO, often buys them because of a percentage of the company's income. And he gets the same rights as other shareholders.
4.Legal status. Both ICO and IPO are now governed by the law of a state.
5.The simplicity of investing. Anyone can invest in ICO. In IPO investors are usually venture capital funds, family foundations and other entities with significant capital.
6.Tokens are usually cheaper than shares.
Comparing ICO and IPO: the profit
The shares of traditional companies don't dare to dream of such indicators. Successful IPOs bring 20-40% per year. On average, full return of funds happens in 5 years or more.
Compare ICO and IPO: security and guarantees
The price of shares is generally based on the value of the product, the company and it’s relatively stable. The price of the token is less stable, depends a lot on the area in which the proposed product exists.
Guarantees
The chances of selling falling tokens are about the same as the chances of selling shares, whose exchange rate has fallen and clearly foreshadows the collapse of the company, as you might guess - it’s extremely low.
The difficulty of fraud
ICO provides a lot of opportunities for scammers. The IPO during its existence is sufficiently regulated to exclude these possibilities.
ICO or IPO: what should you choose to invest?
It is a question of personal preferences, intentions and start up capital of a person.
For an ordinary man, ICO is more suitable because it is easier to invest in. To invest in stocks you need to have serious intentions and a solid capital.
Moreover, the ICO market is changing, it is becoming more protected from a legal point of view. We chose ICO, not IPO, despite the fact that we have a working business, which brings profit. Our WELL platform is an already working and profitable business: by 2017 it has the largest therapist network in California, to date, WELL has conducted 22,916 consults, because we trust the ideology of blockchain. This technology can change lives to the best and help transform the healthcare system all over the globe. WELL is building the global, decentralized, blockchain-based marketplace for healthcare.
WELL is globalizing healthcare and eliminating country borders to directly connect healthcare specialists and patients worldwide. Our investors will be able to use our WELL tokens to receive qualified medical care on our WELL platform. Right now, we offer our investors a 40% bonus.