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ICOS VS. IPOS

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Here we’ll go through the basics of ICOs (Initial Coin Offerings), compare them
to IPOs, how to identify a good ICO versus a scam, and how to participate in
one.
ICOS VS. IPOS
All stock investors are familiar with the abbreviation IPO (Initial Public
Offering), which means the initial public offering of stocks. The buyers of stocks
become co-owners of the company, and the company itself gets money from
sales, usually exceeding its annual returns. Recently, a similar abbreviation has
come into existence in the cryptocurrency community: ICO, or Initial Coin
Offering.
An IPO is a legitimate (legally speaking) operation. A company with an existing
and maturing business structure launches an IPO to attract funding. Raising
funds through selling shares is the cheapest way to do this. At the same time,
launching an IPO is a very expensive process. For a company to enter the
exchange, it must meet many requirements, including the volume of
capitalization and undergo an audit. In addition, the company should attract
underwriters who will sell the company’s shares. Then there’s getting the word
out, attracting money and investors, and then the company will start to trade its
shares on the stock exchange. That’s why it is a long and expensive process.
Also, a deficit is deliberately created within the framework of an IPO, and only a
limited number of the company’s shares enter the market.
The creators of ICO campaigns also declare that the number of coins is limited,
and because of this, many people press the panic button, thinking if they do not
buy these coins now, they will have to buy this currency later but at a higher
price.
Both IPOs and the ICOs are risky ways to make money, but they can also be
very profitable. People participate in ICOs hoping to make a quick buck. And as
soon as these people earn their money back, they immediately withdraw them.
That’s why the coins first zoom up sharply and then go down in price when
people start to sell them. This is one of the strategies the speculators use.
In contrast to ICOs, such speculations are rather rare in IPO because of the socalled
“lock-up period.” People, who bought shares before the IPO cannot sell
them until three months later. With ICOs, you can buy coins even during the pre-
ICO stage.
Let’s summarize why so many people take the risk of investing in ICOs. Some
invest money in these projects simply to support them, while other people will
quickly buy and quickly sell, and the third group of people makes the investment
because they read about the project somewhere or, even worse, want to duplicate
the success of their friends.

 

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