ICOs have been called the cryptocurrency world’s answer to IPOs in the real world. And, while there are some similarities, there are also a lot of differences.
For starters, IPOs are often offered to select individuals, rather than being listed on an open exchange. With ICOs, you may have a presale that allows selected individuals to gain access, but thereafter the ICO with be available for purchase on a crypto exchange.
Now, considering how many exchanges there are, finding where the best exchange is to buy your ICO from can be challenging. The same is not true should an IPO become listed – there are only a few main exchanges in mainstream finance.
ICOs and IPOs are both used to raise capital, but in the case of an IPO, the company has already been established, and you can see some record of how it has performed. With an ICO, the company is trying to raise startup capital, and there is no proven track record or even a proven product.
IPOs are heavily regulated, ICOs are not. That means that ICOs are open to a lot more abuse. Frauds are easier to perpetrate because of the lack of regulation. This lack of regulation also means that there are no guidelines as to how funds raised should be applied, or what accountability measures should be put in place.
And, contrary to what people think, buying ICOs does not automatically entitle you to a share in the company or any voting rights. It all depends on the terms and conditions as laid out when the ICO is offered.
You should view ICO investments in the same light as a venture capital investment. You are essentially investing in an idea. If it works and works as well as the developer hopes, you might be smiling all the way to the bank.
If not, you could end up losing every cent. Want to know more about ICOs? Read the infographic below.

ico-roundups-igFull size


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