What are ICO and IPO? Table of Contents
Differences of ICO and IPO
ICO is Initial Coin Offering, which is a type of campaign used by many companies/groups which have created their own Cryptocurrency money using the Blockchain technology.
ICO can be sketchy and you should be suspicious about it before investing your fund.
IPO is Initial Public Offering which happens when unlisted companies issue their first stocks for investors.
ICO imitates the mechanism of IPO, but the main difference is the market.
ICO is used in Cryptocurrency market and IPO is in Stock market.
ICO is new to the world, but IPO used to be the same in the beginning.
So how was the first IPO of Stocks in the world?
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A Quick Glimpse of the World’s First IPO
Once upon a time was a big great company called The United East Indian Company, or as it was named by Britain, the Dutch East India Company.
It had the first IPO in history and hence was the first Public company to issue stocks.
The First Stocks by the Dutch East India Company
The company was established way back in 1602, and is sometime viewed as the first multinational corporation in the world.
If you think that Apple or Google are powerful, you should take a look at what the Dutch East India Company was allowed to do.
It was nearly a government, able to establish colonies, negotiate treaties, make its own coins, imprison and punish convicts and even – wait for it – wage war.
Why did the Dutch East India Company issue stocks?
For the exact same reasons companies do it today – to raise money.
The company needed to reorganize its economy and it needed money to do so.
The Amsterdam stock exchange was founded in September 1602, just 6 months after the company was founded.
Yet the key to the success of the Dutch East India Company was that its ownership had been opened up to the public.
This enabled the vast sum of 6.5m guilders to be raised.
The exchange also allowed the company to issue bonds to finance its short term needs.
In this way the first stock exchange was a crucible of modern capitalism.
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The dividend was over 15%
The history of the Dutch East India Company is also a kind of template of what was to happen to companies on stock markets over the years to come.
The company’s IPO resulted in a 15% rise to its issue price.
Twenty years later the price of the share had surged 300%.
Not impressed yet?
During that period, the average dividend from the company was a whopping 18%.
4 years following its foundation, the Dutch East India Company paid an unbelievable, record dividend of 75%.
“Tulip Bulb Craze” crashed the market
Kindly keep in mind though that since the concept “stock market trading” wasn’t even invented at the time, buying and selling these stocks was done manually.
Sometimes, people were paid dividends in spices.
The company is also noted as responsible for the world’s first market crash when, in 1634, its tulip-carrying ships set off the ‘tulip bulb craze’ that ended in a huge market crash.
That didn’t shake the company though and it continued to operate until 1800, when corruption and competition proved to be too much and it went bankrupt and was dissolved.
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Comment by Hans
April 24, 2024
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