If you have been in the cryptocurrency space in 2017 or early 2018 you certainly know about ICOs as they were all the rage back than and some early companies made huge early investment rounds with billions of dollars with nothing more than a whitepaper and a credential team. Those times are over now in 2019 as the hype has settled down, but ICOs are still a great idea and investment vehicle that allow both companies to benefit from getting started with enough runway and retail investors to get a piece of the pie very early on.

When it comes to investing in crypto companies, 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 is short for initial public offering, which usually means when a stock launches on the public market shares are sold early to institutional investors. Sometimes retail (individual) investors can also join in, usually with a big investment and a huge number of shares. Now that many shares are in the hands of these early investors and the original company holders, market liquidity can be better as some of the early investors are looking for a quick buck while others might believe in a longer term strategy.

Through this process, colloquially known as floating, or going public, a privately held company is transformed into a public company. Initial public offerings can be used: to raise new equity capital for the company concerned; to monetize the investments of private shareholders such as company founders or private equity investors; and to enable easy trading of existing holdings or future capital raising by becoming publicly traded enterprises.

More details at: https://en.wikipedia.org/wiki/Initial_public_offering

ICO

ICO is the abbreviation of Initial Coin Offering. It means that someone offers investors some units of a new cryptocurrency or crypto-token in exchange against cryptocurrencies like Bitcoin or Ethereum. Since 2013 ICOs are often used to fund the development of new cryptocurrencies. The 2017 hype (where millions were raised in seconds during the summer ICO hype) saw many hundreds of companies and tokens created, usually on the Ethereum blockchain.

For traditional companies, there are a few ways of going about raising funds necessary for development and expansion. A company can start small and grow as its profits allow, remaining beholden only to company owners but having to wait for funds to build up. Alternately, companies can look to outside investors for early support, providing them a quick influx of cash but typically coming with the trade-off of giving away a portion of ownership stake.

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.

More details: https://www.investopedia.com/terms/i/initial-coin-offering-ico.asp

STO

A new alternative do that are an STO (Security Coin Offering). Those token offer are backed by the SEC. This means the token are connected depending directly to the companies profit. The SEC (Securities and Exchange Commission in the US) holds here responsibility for enforcing the federal securities laws, proposing securities rules, and regulating the stock and options exchanges.

So it may still possible that a ICO are still effective as an investment. Finally buying and keeping cryptocurrencies is a bet on the success of this silent revolution of money.

More information can be found in this more detailed post.