The crypto industry is full of confusing acronyms that sound far too alike. So, we thought we’d break some of them down for you.
Let’s have a look at the difference between ICOs, IPOs, IEOs and STOs.
What is an ICO?
ICO stands for Initial Coin Offering and represents a form of crowdfunding for a crypto-related project in its pre-launch stage. In an ICO, a company is able to raise funds for a new product or service by selling a new crypto token to interested investors. The tokens often have some sort of utility within the future product.
ICOs reached peak popularity back in 2017, when investors saw an opportunity to get their hands on some cheap tokens. They were also extremely popular with scammers, however, who tried their luck raising funds for all sorts of suspicious (and sometimes non-existent) projects.
What is an IEO?
Let’s move onto a variant of the ICO, the IEO. IEO stands for Initial Exchange Offering and is a type of token sale which is supervised by a cryptocurrency exchange. Instead of a company selling its tokens directly to investors, it instead sends them to an exchange, which then sells them to individuals on behalf of the company.
IEOs are more convenient than ICOs, since funds are sent straight to buyers’ accounts, more regulated, since the exchange is responsible for mandatory investor checks, and more accessible, since they’re open to anyone.
What is an IPO?
Acronym number three is IPO, which stands for Initial Public Offering. This describes the process of a company selling shares of its business in exchange for funds.
An IPO is how a traditional company raises funds, unlike an ICO, which is the crypto industry equivalent. The difference between them is that in an IPO, an investor receives a share of a company, whereas in an ICO, they receive a token which doesn’t represent any equity in the company. IPOs are also more regulated than ICOs.
What is an STO?
Next up is the STO, or Security Token Offering. STOs feature aspects of both ICOs and IPOs. In fact, another name for them is tokenised IPOs.
An STO is essentially a public sale of tokenised securities (aka security tokens) on a crypto exchange. A security token represents an investment contract linked to a financial asset.
While STOs share a process with IPOs, STOs issue tokens on a blockchain while IPOs issue traditional share certificates. The STO process is arguably quicker than the IPO method though, thanks to the use of blockchain technology, as well as cheaper, due to the lack of intermediaries involved.
STOs are often described as legally-compliant ICOs. They make a significantly more secure investment than ICOs, and are much more difficult to launch, since they are subject to strict regulation.
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There you have it - a brief introduction to ICOs, IPOs, IEOs and STOs. Which ones had you come across before, and can you now tell the difference between them?
FAQs
Key Differences Between ICO, STO, IEO, IPO
What is the difference between ICO and IEO? ›
With an ICO, developers conduct a marketing campaign. To do so, they use paid advertising, forums and social networks. With an IEO, the exchange takes over this role. An IEO is run by a central authority: an exchange.
What is the difference between STO and IEO? ›
What is the main difference between IEO, IDO, and STO in the crypto space? IEOs (Initial Exchange Offerings) are conducted on centralized exchanges, IDOs (Initial DEX Offerings) on decentralized exchanges, and STOs (Security Token Offerings) involve tokenizing real-world assets like equity or real estate.
What is the difference between IPO and ICO? ›
In an IPO, the public can buy into the company's equity, thus participating in the ownership of the company. Whereas in an ICO, crypto assets such as tokens or coins are sold to investors who are essentially prepaying for future products or services.
What is the difference between STO and ICO? ›
STO tokens are traded on regulated exchanges, while ICO tokens are traded on specialized digital currency trading platforms. ICOs and STOs offer business owners and operators another way to raise capital.
Is ICO better than IPO? ›
An ICO typically occurs at a very early stage in the company/project. Often before it has any working products or services and is in need of working capital to bring their unproven concept/idea to life. Therefore, ICOs are riskier and should demand a greater return on investment than IPOs.
Why is ICO not allowed in US? ›
Yes, Americans can legally invest in ICOs, however, they must be aware that U.S. regulators may consider an ICO a securities offering and enforce securities law on those engaging in it. Investors should be aware of the potential risks associated with ICOs, including the possibility of fraud or manipulation.
What is the difference between STO and Eto? ›
A security token offering (STO) is an event during which a company offers its security tokens to investors. The term equity token offering (ETO) is used when the security tokens in question are equity tokens.
What is the relationship between ICO and IEO? ›
Understanding ICOs and IEOs: The Basics
ICOs allowed for widespread crowdfunding, often open to anyone willing to invest. However, the unregulated nature of ICOs led to concerns about investor security and project credibility. This paved the way for a more secure and transparent fundraising model — the IEO.
What are STO orders? ›
STO is just Stock Transport Order => functionality to move stock from one plant to another plant in two steps( inclidung GI in the sending plant and GR in the receiving plant).
In many ways, an ICO is the cryptocurrency version of an initial public offering (IPO) in the stock market. While it's possible to make sizable profits through ICOs, a lack of regulation makes them extremely risky. In this guide, you'll learn all about ICOs, including how they work and some notable examples.
What are the two types of IPO? ›
There are two types of IPOs. A fixed price issue where the price of shares is fixed and a book building issue where the shares are set after the closing date of the bid. A company can make use of both types of shares separately or combined for an IPO.
How does an STO work? ›
An STO, also known as a Security Token Offering, is a digital token supported by blockchain technology that represents a stake in an asset. STOs enable digital funding, while still complying with government regulations.
Is STO a purchase order? ›
PO is obviously used for external procurement - STO can be either used for stock transfer order from plant to other plant or you can use from company code to other company code with the involved process of SD, from STO, GI posting, GR and invoice verification! A PO is generally used for transactions involving vendors.
What does STO stand for token? ›
STO stands for Security Token Offering. It is a method of issuing securities using blockchain technology, converting traditionally recognized securities assets (such as stocks, bonds, real estate, etc.) into digitized tokens. These tokens are then issued, traded, and settled through blockchain technology.
What does IEO mean in Olympiad? ›
The International English Olympiad is a competition for students who have passed an international English language test worldwide.
What is the purpose of the IEO? ›
IEO is an international English language competition for high school students. It tests the ability to use English in speaking, reading, and writing.
What does IEO mean in crypto? ›
December 2022) An Initial exchange offering (IEO) is the cryptocurrency exchange equivalent to a stock launch or Initial public offering (IPO).
