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Security token offering vs Initial coin offering: Everything you need to know!

Security Token Offering has been the strategy dominating the headlines of Blockchain news for recent years. People nowadays give importance to Security with predominant hacks and scams prevailing in the environment. In general, STO’s are the legalized version of ICO’s.

The crypto fundraising method is turning from utility to security tokens. Security Token Offering offers a solution for startups seeking to tap into a new investor pool. Initial Coin Offerings (ICO) was the victim behind their own success!

As cryptocurrencies have taken the world to the next stage, innovative startups have raised millions of dollars through ICO. There were scams reported with Initial Coin Offerings which quickly caught the eye of the United States Securities and Exchange Commission (SEC). This is when utility tokens began as an important consideration and then emerged the solution sec security token offering.

What is the STO security token offering?

STO’s are cryptographic tokens that are completely compliant with security laws giving taken holders a stake in the issuing entity. Security Token owners leverage with huge benefits such as profit-sharing, voting rights, and the ability to trade their holdings on exchanges.  

With the infrastructure to support the security tokens is still built out, security token offering services remain to be a promising solution for startups to get into investing and reap profits.

Moreover, traders consider this as a hyper-efficient trading system that can bring forth laurels to your business. But the thing is until it overcomes all the issues associated with ICO platforms!



Security Token Offering vs Initial Coin Offering

 

ICO (Initial Coin Offering)

ICOs were the first crowdfunding option to surface in the blockchain ecosystem. This method of fundraising enabled anyone, from anywhere, to finance the development of a company or project. ICOs have also been baptized in the cryptocurrency version of Initial Public Offering (IPO). In exchange for their investment, the investor will receive several utility tokens, or, user tokens in other words. These tokens represent future access to a company’s product or service.

STO (Security Token Offering)

 

STO (Security Token Offerings)

STO is in its essence similar to ICO but it also conforms to regulatory requirements. STOs surfaced as a reaction to the lack of oversight when it came to ICOs, to bring regulation to blockchain-based crowdfunding and offer more guarantees in the space of raising funds using tokens issued on a blockchain.


Conclusions on ICO vs. STO

As the regulations in the blockchain space gain more importance, so are STOs experiencing significant growth while the use of ICOs is in decline. At Global Blockchain Summit, Daniel Diemers, a professor of Global Master’s in Blockchain Technologies spoke about cryptonomics space and ICOs and STOs among others. He concluded then that of the fundraising tokens out there, STOs are going to make the race.


He predicted that the years ahead of us will be marked by a pluralism of different forms of currencies and digital tokens: central bank-issued fiat currencies, the central bank-issued cryptocurrencies, e-money not backed by blockchain, closed platform cryptocurrencies, full privacy coins, tokens, and hybrid cryptocurrencies and possibly something more innovative. All in all, we’re living in an existing time for finance.

 

Do you need an STO Software, Script, Website to be developed? This is made simple with Codezeros. With desired expertise in STO platforms, we bring forth the required outcome in accordance with clientele expectations!!


Talk to our Experts - https://bit.ly/3A6uXrM

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