The concept of IPO means ”Initial Public Offering“. IPO is the process of companies offering their shares to the public in order to increase their investment capital, selling them at a certain rate and raising their investment capital.
The concept of IPO is that entrepreneurs or companies who want to create a new token, application or service create a kind of digital entity through the networks of major cryptocurrencies to enable them to create capital for the purpose of realizing the business idea.
In other words, companies or entrepreneurs who have a business idea, who want to create capital for this business idea, can create their own digital assets through cryptocurrency networks that have made protocol arrangements for the creation of IPOs. But these digital assets are not considered coins. These are Units commonly referred to as “tokens”.
Entrepreneurs who want to share their business ideas with people, create Capital, start business processes, distribute the IPO tokens they create in exchange for coins they identify. They form capital by converting the coins they acquire and which can be traded in exchange for real money into real money.
In order to fully understand the IPO concept, it is useful to define coin and token concepts and to specify the differences between them.
WHAT IS A COIN
Coins are digital currencies that have their own blockchain networks that can be traded in exchange for real currencies or in exchange for cryptocurrencies. To learn more about cryptocurrencies, what is cryptocurrency? you can read our article.
WHAT IS TOKEN?
Tokens are digital entities that do not have their own blockchain systems and certain coins can be traded on blockchain networks. Tokens are not considered coins. Assets that can only be indexed to coins designated under the IPO. For example, if the token is a concert ticket, you can only go to the designated concert with that token. Its date and time are clear. The action that can be carried out and the rights that are owned are obvious.
What are the differences between TOKEN and COIN?
Coins have their own software and networks. This network is supported by miners or computers that hold database records. In tokens, this is not the case. They can be processed through networks of different cryptocurrencies.
In this context, we can make the following inference. Tokens created by an entrepreneur group to generate capital for a business idea can only be given to you as rights (product/service) that you can use in that business area. Or you can make an investment by assuming that these tokens will be valued in the following processes.
HOW DOES IPO WORK?
If an entrepreneur or company wants to create capital by implementing an IPO, it shares some information about its project. The scope of the project, what it is about, how much capital is needed for its implementation, duration of the project, and what cryptocurrency will be accepted in return for token should be specified within the scope of the IPO.
Once the IPO campaign has started, people or institutions wishing to invest in the project can support the project by purchasing the tokens produced by the initiative that launched the campaign with coin balances that they say are interchangeable. If the capital quota set for the start of the project is filled, the project starts. Individuals or institutions that support by receiving tokens expect the project to be valued in the process and the tokens they have received to gain value. If the required amount of capital is not reached, the project will not start. Those who want to support the project as investors are also returned their coins.
To give an example of some remarkable IPO projects that have been successful so far:
Ripple (XRP)
Ripple, which has a platform called RippleNet as a project, can be cited as one of the most successful tokens in the world. Ripple, which is produced as an intermediary value in product exchange processes, is a digital entity that can be traded in cryptocurrency markets and has its own software infrastructure.
Ethereum
Ethereum is among the most successful IPO projects ever issued. Ethereum is actually a platform that aims to enable blockchain technology to be used for different purposes. As well as allowing the production of new coins through this platform, services are also provided for the anonymity of all transactions carried out over the internet.
Apart from all these IPO projects, there are many IPO projects that have achieved success. However, we hope to be able to explain what IPO means in general.
