Over the last two years, crypto-currencies have turned into a global phenomenon. The world has seen the rise of crypto-millionaires and many start-ups have launched around this concept. Crypto-currencies have become an apple of the eye for non-conformists who want to change the way we look at money. With the dynamics of business and technology changes, people are looking to use the internet to make the most out of opportunities.
Another great thing expected to explode in 2019 is STO (Security Token Offerings). Before their arrival, the crypto-currency market was ruled by ICOs especially in 2017. However, the year 2018 saw a decline in the ICO appeal as it was used in the several high-profile scams. Let us dive deep and look into the ways the market of online money is changing.
The Difference Between ICOs and STO
ICO is an abbreviation for Initial Coin Offering – a term which is famous in the crypto world. The initial days for these currencies were not all roses; therefore, in order to help develop a network of different currencies, the concept of ICO was introduced. ICO is about the offering a few units of a new currency in an exchange with well-known currencies like Bitcoin and Ethereum.
Initially, the ICO concept took off and it became popular by 2016. The year 2017 was all about ICOs and investors put a lot of their hard-earned cash in the concept. Because of the immense trusts from investors, scammers saw an opportunity and cost people millions of dollars. This scamming resulted in the loss of credibility of ICOs in 2018 and investors have now turned to another form of fundraising – STO(Security Token Offerings). STOs is also a fundraising approach but this time the token lenders are subjected to regulations. It is similar to the securities people get while investing in stocks and bonds.
The Rise of STOs
Although the ICOs are still common, there is a huge possibility that they might go down the drain by the end of 2019 – given the issues that loom over them. Meanwhile, STOs are being tipped to completely dominate the market by the mid of 2019. Since the presence of government is not the idea behind blockchain, many helpful members of the community have tried to keep things under control. But since these people failed to assert their presence, the governments are now taking interest in regulating crypto-currency.
The main reason why regulators have taken interest in regulating cryptocurrency is whether it is being used as a security or not. Many projects said that their coins were equivalent to utility tokens – which was not the case. People invested their money thinking that they will be getting a return on them – which also didn’t happen. The idea behind the whole deal was that if the project takes off and the currency turns into a success, the value of the security will increase which will benefit the investors.
What to Expect in 2019?
Since the year 2019 is said to be the year of STOs, here are a couple of things you need to look forward to:
- Because of these security tokens, many banks and governments will look at blockchain in a welcoming manner. Although it is beneficial for the people, there is a chance that it might pose a threat to the whole concept of banking and blockchain might experience retaliation, and
- The rise of STOs might also help with the fundraising market. Initially, the ICOs were used for crowdfunding and fundraising, but this trend might switch to STOs. People invested through ICOs knowing that it can be a scam, now imagine how much people will invest when they know that it is backed by security.
It must be noted that even though the STOs are safe, investors will have to re-confirm in order to stay clear from scams. Moreover, while investing, it must be kept in mind that investing through a STOs whose team is new to the market increases the chances for a loss.
Are ICOs Gone Forever?
Since it is likely that STO trend will be replacing the one of ICOs this year, the question “Are ICOs gone forever” remains unanswered. To answer it, we first must realize that STO are not a replacement of ICOs. We’ll still be seeing a variety of projects being run on ICOs as the use of utility tokens will not fade away in 2019. But the use of STOs will only get stronger and stronger.
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Passionate about Blockchain and has been researching and writing about the Blockchain technology for over a year now. Also holds expertise in digital marketing. follow me on twitter at @sagar2803 or reach out to him at sagar[at]coingape.com