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ICO Vs. IPO: Key Differences

We have always come across old but clever advice: If you have money, do not put it in the bank, but instead, let it work for you.

The onset of cryptocurrencies has provided us with a new investment option that is known as the Initial Coin Offering or ICO. This means that if you have money that you can invest in, you can go with a famous company that is available in the market and based on an Initial Public Offering or IPO, or you can support some of the new companies by using ICO.

Before you start: What is an ICO?

IPOs are usually meant for well-established businesses, while ICOs are more for young companies. Let us use a metaphor to demonstrate, the IPOs is a 40-year-old landscaping equipment company owner, and the ICO is an 18-year-old computer geek building his supercomputer in his father’s garage.

The former has a known and profitable business, a completely authenticated bank account, and a positive company record with several people in the market who are aware of his operations. The second has none of the above. He can be the next Steve Jobs, or he may turn into a fiasco that will be forgotten in a year.

Whether we choose to invest in a young, anonymous computer genius, or a respectable middle-aged businessman, the purpose is the same. We expect the business will grow and your profit will double accordingly.

Now, let’s compare the distinctions between the two:



There are several requirements that a business has to meet before listing its shares through an IPO. This includes having a minimum earning a point and an exceptional track record. Traditional distribution of IPOs can be prolonged as it requires several legal procedures. Another requirement is a formal brochure. The prospectus represents a legal statement of your intention to issue your shares to the public. It should include basic information about the company and its upcoming IPO to help potential investors make an educated decision. Therefore, for an IPO, we need lawyers, accountants, banks, and a lot of patience.


Since ICOs do not require adherence to any regulatory framework and legal protocol, most of them have no antecedents. They only need a White Paper that defines the details of the project.

The entire process of an IPO has a much more concise duration. Usually, an ICO project also issues an official document, but unlike the IPO, its format does not have a certain standard. Also, keep in mind that this document type is not considered legal in some countries.

We need to have a functional and secure web page where investors can evaluate the details of the project and proceed to buy the tokens offered in the ICO. So for ICOs, you need programmers and the Internet to start with.

This might help you in decision-making: ICO vs. Venture Capital: What is best for your company?

Investor dealings


It is quite easy to invest in a company in our country. If you wish to invest in a foreign company, typically there is an additional legal procedure you might want to undertake. So you will most likely need to use the services of a certified stockbroker.


The best part of an ICO is you will only need the Internet to start investing. You can buy a token from any company in any country. An exception is that some projects are not available in the US because of financial protection regulations established in the US market for domestic people.

Profit (Profits for the investor)

Let’s assume that both sorts of investors were lucky and their investment returns were profitable. What do they get?


Shares obtained through an IPO also represent a share of the company’s future profits. Shareholders receive annual dividends, depending on the company’s progress during the year. Another way to earn money is to invest early and sell it when it appreciates its value.


It would be best if you kept in mind that purchased tokens of an ICO will not grant you the ownership of the project. There are several ways token investors can reap prospective benefits, that depends on how the token is structured. It can be a fixed price, and we can buy or sell them, an amount of money that we will receive if the company earns more than a specific amount. Whatever it is, it is clearly documented in the official project record.

To better understand the topic: What is an ICO token and how does it work?

Does this indicate that investing in an IPO is more secure than investing in an ICO?

Inspite of all the documents, checks, and legal requirements, the company can still be at loss, and our investment will be of no use. On the other hand, if we choose to invest in the ICO of a project that looks promising, we could be facing a very profitable investment with much less bureaucracy. It is best to learn everything about the project thoroughly to guarantee that it is an idea that will be worth more money in the future.

An additional thing we must keep in mind is that we need to consider the security of the project. In the IPO market, there are more laws and regulations to protect investors against scams and fraud. When dealing with ICO’s, investors still do not have thorough protection since many governments still do not comprehend how this collection procedure works. This situation will require us to be more vigilant and alert before we place our money in a project.


Legal coverage

Record for the company

Quick investment

Small investments

International accessibility









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