What makes ICOs distinct from traditional IPOs?

ICOs, or Initial Coin Offerings, are distinct from traditional IPOs (Initial Public Offerings) primarily because they provide tokens instead of equity shares. In an IPO, investors purchase shares representing ownership in a company, and these shares often come with voting rights and dividends. In contrast, when participating in an ICO, investors buy cryptographic tokens, which may grant them access to a project's services or products, but do not confer ownership or control over the company. This difference highlights the fundamental nature of what is being offered—tokens in the case of ICOs versus equity in the case of IPOs.

Furthermore, while ICOs do not typically require a detailed prospectus like traditional IPOs do, and don’t guarantee returns, these aspects do not define their distinctiveness as strongly as the nature of the offering itself. The unique structure of tokens represents a shift from traditional financial instruments to a more decentralized and blockchain-based model, setting ICOs apart in the landscape of fundraising methods.