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Blockchain Complete Guide  

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Fundraising (ICO & STO)

Blockchain has been bridge the gap between Regulation and crowdfunding using tokenization. Investing in High worth projects was always reserved for high net worth venture capitalists. Blockchain has proved to be boon for fundraising activity.

STO

Security tokens are blockchain-based tokens that represent security. With STO (security token offerings), companies can tokenise their financial assets such as equity and debt.

Properties

  • STOs enable fractional ownership, due to which minimum investment can be reduced

  • STOs are regulated.

  • Need for a new administration and extra cost, as STOs need official registration through financial authorities.

  • High Legal costs due to regulations

  • Corresponding to STO token, there is an asset linked which it signifies.

  • The market cap for STOs will be more than $10 trillion by 2020.

  • STO tokens are easily transferrable (unlike traditional Share markets currently which might take 2-3 days)

ICO

Initial coin offerings provided an equal playing field by opening an entire ecosystem for raising capital, however, because of unregulated behaviour. Also, Unlike traditional equity, an investor had limited rights as part of holding the token.

Properties

  • Initial Coin Offerings

  • It refers to the token offering from the company or organization to raise capital for the project. In 2016-18 concluded ICOs are mostly unregulated.

  • Less Regulation than STOs

  • Less Legal costs

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