To understand well the differences that exist between ICO and STO it is important that we have clear definition of each of them. That’s why in the previous article titled What are the ICOs of cryptocurrencies? We already talked a little about this means of financing that is used by those who want to start a new blockchain with a different cryptocurrency and need the economic resources to put it into operation.
This type of financing has the advantage that it can be set up with small amounts, since they do not require a very high investment by the owners, it is only necessary to have a clear project in mind (since the ICOs also work for other types of projects). Thus they are not cryptocurrencies), and present it to the group of possible investors together with the profit that they would obtain by their participation.
What are the STOs?
Unlike ICOs where participation is free, STOs are regulated by the SEC (Security and Exchange Commissions). In an STO (Security Token Offering) the most important thing is security, that’s why its offer is based on tangible assets and this arose thanks to the high numbers of scams and demands that occurred with many ICOs that did not protect the investment of those who want to participate in the offer.
It is for that reason that STOs are considered as an alternative to make scams and fraudulent offers in the world of the blockchain, also guaranteeing the protection of the income of investors, however, although it seems to be the ideal option, to use STO has some disadvantages compared to the ICO and then we will name them.
Disadvantages of STO
The resources that can be had in STO are limited in terms of liquidity and trade, this could be considered a disadvantage, since it makes them a little more difficult to negotiate later, unlike the public services issued by the ICO. This could be considered the only real disadvantage of this system of security tokens, since in general the advantages are greater.
Advantages of the STO
The main advantage provided by STOs is security and this is guaranteed by their registration in the Securities and Exchange Commission. On the other hand, they only allow projects that are really reasonable and serious and that have a clear and coherent objective, thus avoiding the scams of those who try to present unreliable projects. It has also generated a lot of confidence since experts have determined that the market capitalization expected for 2020 is 10 trillion dollars.
Although in the world of cryptocurrencies everything is very variant, apparently this is the moment of the STO, leaving aside the tendency that there was to the ICO and that gave origin to solid cryptocurrencies and well known nowadays as for example Ethereum. STO has managed to open the field thanks to the security it provides to investors that was affected by the appearance of scammers who tried to play with their trust, thus affecting the credibility.
Nowadays, thanks to the STO, many more successful Blockchain projects could be presented, however, this does not mean that the ICOs will disappear completely, but that both systems could coexist for a good time, which would generate a greater gain for the networks blockchain and would boost its growth to even more gigantic steps than those that have been seen in recent years.
What do you think about this topic? Do ICO or STOs seem better to you?
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