With the end-users turn, if they want to exchange at x3-x100 the price or want to spend digital tokens on the platform then it can be possible at their turn. In the other explanation, these tokens or coins are just like the vouchers that end-users can exchange for goods or services on certain platforms. The simple ways to understand what is ICO, Tomochain has integrated into local businesses in Saigon to allow end-users to pay their beers and food services by its tokens.<\/p>\n
If we go with the author of \u201cThe business blockchain\u201d \u201cThe William Mougayar\u201d a token is \u201ca unit of value that an organization creates to self-govern its business model. It empowers the users to interact with its products while facilitating the distribution and sharing of rewards and benefits to all of its stakeholders.\u201d<\/p>\n
What is STO?<\/h2>\n
STO is known as the security token offering in which an investor is issued with the crypto coin or tokens to represent their investment. However, it’s pretty much different from ICO and IEO. It is the new approaching way to represents an investment contract into an underlying investment asset, such as stocks, bonds, funds and real estate investment trusts (REIT). As the recent startup in Vietnam, there is https:\/\/realstake.io in which investors with a limited budget at 1000$ monthly income can invest for sharing profits on Real Estate, It’s REIT business model which is popular in the developing country like the US.<\/p>\n
Security can be explained as a \u201cfungible, negotiable financial instrument that holds some type of monetary value,\u201d such as an investment product that is backed by a real-world asset such as a company or property. With the help of security token, anyone may get the ownership information of the investment product, recorded on a blockchain.<\/p>\n
When you invest in traditional stocks, for example, ownership information is written on a document and issued as a digital certificate (e.g. a PDF). For STOs, it\u2019s the same process, but recorded on a blockchain and issued as a token.<\/p>\n It’s defined as \u201cAn Initial Exchange Offering\u201d is the platform of a cryptocurrency exchange. An IEO is conducted by a crypto exchange on behalf of the startups who are seeking to raise funds with its current tokens. As the token sale is conducted on the exchange\u2019s platform, token issuers have to pay a listing fee along with a percentage of the tokens sold during the IEO. In return, the tokens of the crypto startups are sold on the exchange\u2019s platforms, and their coins are listed after the IEO is over.<\/p>\n As the cryptocurrency exchange takes a percentage of the tokens sold by the startup, the exchange is incentivized to help with the token issuer\u2019s marketing operations. IEO participants do not send contributions to a smart contract, such as governs an ICO. Instead, they have to create an account on the exchange\u2019s platform where the IEO is conducted. The contributors then fund their exchange wallets with coins and use those funds to buy the fundraising company\u2019s tokens.<\/p>\n For example, Binance can work closely with the team for IEO launching based on their platform user database and ensure the tokens or coins will also be known by its traders.<\/p>\n So, We have some basic understanding of 3 types of fundraising in the blockchain business. Let’s go deeper to its pros and cons that need to feed our thoughts on whatever decisions will come later.<\/p>\n \u2022 Between STO and IEO, creating initiatives and setting up of an ISO project is a very easy task.<\/p>\n \u2022 The initiatives and setup of an ICO project are very easy compared to STO, and ICO project needs to issue a Whitepaper, a website to demonstrate its benefits and come up with concerns with a backup team which will take care in term of technical support.<\/p>\n \u2022 Cost for an ICO launch is relatively low and thus it is suitable for amateur investors who are new in the market with presumably low funds to invest.<\/p>\n \u2022 One of the main drawbacks of this system is that it\u2019s security features. The system is susceptible to scams and fraudsters who pollute the smooth functioning of the system.<\/p>\n \u2022 For long-term investments, ICO is not a preferred option that already had a lot of bad reputation.<\/p>\n \u2022 STOs deal with real assets and they comply with government rules which is one of the main reasons that it is one of the most trusted investment tools in the crypto world.<\/p>\n \u2022 STOs are more secure because of limited accessibility and only recognize investors who have been properly authenticated can take part in STO operation.<\/p>\n \u2022 It is good for long-term and serious investors due to high-security<\/p>\n \u2022 Liquidity is very high in IEO.<\/p>\n \u2022 Fundraising cost is really high in STOs compared to the other two and relatively a complex process as well.<\/p>\n \u2022 Due to strict security regulations, cross-border investment is tight in STOs.<\/p>\n \u2022 Low liquidity level due to tight government regulations. In certain cases, the investments cannot be cashed out for a period of over a year.<\/p>\n \u2022 STO is regulated by the security laws and all transactions are KYC or AML accredited.<\/p>\n \u2022 All exchanges are KYC\/AML verified so ensures very high security to the investors.<\/p>\n \u2022 Investors directly take part in the exchange, unlike ICO and STO.<\/p>\n \u2022 Due to the regulatory levels, the platform is trustworthy and protects the investors of fraudulent activities.<\/p>\n \u2022 Participants do not transfer their contributions to a smart contract but directly to their accounts.<\/p>\n \u2022 Cost of fundraising is very high in IEO and the system itself is difficult to set up.<\/p>\n \u2022 Liquidity is very low compared to the other two.<\/p>\n \u2022 Investors have very little control in the activities of the exchange.<\/p>\n We hope that you have understood there is a lot of difference between ICO, IEO, and STO that will help you a lot in any investment decisions in the future that not harm and taking risks. We have believed that Blockchain is the fresh baby born and especially emerging since 2011, there are also a lot of optimistic views ahead for any investors who really want to contribute to this technology disruption and transformation. But again, take some study on projects carefully beforehand.<\/p>\n![\"STO](\"https:\/\/news.bitcoinvn.io\/wp-content\/uploads\/2019\/08\/STO_vs_ICO.png\")
What is IEO?<\/h2>\n
Pros of ICO<\/strong><\/h3>\n
Cons of ICO<\/strong><\/h3>\n
Pros of STO<\/strong><\/h3>\n
Cons of STO<\/strong><\/h3>\n
Pros of IEO<\/strong><\/h3>\n
Cons of IEO<\/strong><\/h3>\n
Conclusion:<\/strong><\/h2>\n