In the previous post of this series on how to boost your business with blockchain, we were discussing the fundamentals of blockchain tech. If you have missed it you can find it here: How to boost your business with blockchain?
Briefly speaking, we reviewed in a simplified non-technical way the core of blockchain technology and we discussed how you can benefit from integrating it into your business. We came to the conclusion that the main benefit of using blockchain technology is to achieve trust.
In the previous post, we concluded that trust is essential for making business and its the essence of blockchain tech, so using blockchain is beneficial for attracting new customers and partners.
In this post, we are going to discuss whether you should do an ICO or an STO to power your existing business or finance your new business idea.
So let’s first explain what is ICO and what is STO.
ICO stands for Initial Coin Offering and as many of you had heard it was the main way for non-existing projects to gather an impressive amount of money during those last few years.
It all started with Ethereum raising money to develop its platform, the one that has become the main platform to make ICO’s on. The peak was sometime in the middle of last year with projects like Tezos and FileCoin raising as much as 250 millions of dollars from individual investors.
Even though many of the projects failed to deliver the expected products, either due to lack of technology developments (the main issue being scalability) or by simply disappearing with bags full of money (a.k.a. SCAM) the
Due to a large number of scams and projects that did not manage to deliver, plus the downturn of the market, many proclaimed that the ICO era is over and that the new way to raise money is via an STO. But what is STO?
STO stands for Security Token Offering and the main difference to the ICO is that the tokens are Security Tokens, backed by something tangible like the assets, profits, or revenue of the company. To put it in another way, only accredited investors can participate in the offerings. Their funds are protected by the law and the investors are getting either a part of the company (shares) or part of the company’s profits (dividends).
Securities laws are well developed and defined in most of
To wrap it up …
ICOs are a great way to deliver a utility token that will power your business by allowing the early “supporters” of your idea to use your services at a reduced price.
STOs are an alternative way to raise money by offering security tokens, which are seen as shares of your company, giving rights to dividends or part of your company to the investors.
Which of both to chose to boost your business depends on your business plan but clearly any of the above can bring you the fresh capital that will allow you to grow your business.
If you have a great idea — but you not sure if blockchain technology can be integrated into your business, Get in touch with us at email@example.com.
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Also published on Medium.