IPO vs ICO vs STO: What Are They And How Do They Differ From Eachother
By Biditex on ALTCOIN MAGAZINE
Money is one of the essential things in our lives. It may or may not be the source of happiness, but we should all agree that money is the source of living, we need money in order to pay our taxes, loans, leases or even college fees and tuitions. And to get an extra money, some people work extra hours, put their money in the bank, or they invest the money. Investments can be very different, for example, you can buy some shares of companies, invest your money in a new business or invest in crypto-currencies. When it comes to investing in crypto or stocks, we can see different names for the “investment” such as IPO, ICO, or STO.
So what are these IPO’s, ICO’s or STO’s?
IPO
IPO also known as initial public offering is the traditional way of buying stocks of a company. From the name, we can see that it says “initial” because it is the first time in that company’s history that they are offering some share of the business to the public. In IPO you usually need an investment bank in order to go public. If a company does an IPO it does not mean that it is a new company, there are many companies that are very successful and old but are not offered to the public such as Levi’s & Co. IPO is done when the company needs money, to let’s say enlarge the company or to invest in an equipment or a plant that is required in order to get more money generated, and when a company does an IPO, and you invest in those stocks you get to have a part of the company.
ICO
In ICO, the terms are different than what is in IPO’s. ICO is more or less a crypto word because most of the crypto-currencies are done through ICO. ICO is the term that used when a crypto-currency goes to the public. Many times, crypto exchange platforms or other websites do their own ICO as well. ICO is done for the same reason as IPO, to generate more money. But when you invest in ICO, you don’t get to have a share of that company. In other words, when you invest during a company’s ICO you get a share of the market cap but not in the company. For example, let’s say you own 114,347,861 PAY, which is 100% of PAY coins as of now, it means that you only have the coin and the company (in this case TenX) is not yours.
STO
STO (Security coin offering) is somehow connected to ICO. So in STO, they offer coins to the public, but what is different here, is that STOs are backed by SEC, they should pass some tests to be considered as the Security and STOs would get penalized if they don’t follow the needed regulations. Other than this STOs are somehow similar to IPOs as well in some terms, for example, their prices are connected directly to the company’s profit, losses or financial statements of the parent company.
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