When offered to invest in an ICO, you got used to saying “no thanks”. Here comes a new way to reinvest your savings: the STO, or “Security Token Offering.”
Security Token Offering are the new wave
After ICOs and having in mind that hundreds of them sprouted after a few months, it is worth mentioning that also Scam ICOs were In-fashion for a time. Therefore, it seemed logical to move on to the next stage.
The Security Token Offering would then be a more “serious” version of the ICO, in which the coins are called “securities.”
This evolution would leave behind the rudest scams and unattainable promises, and set new rules and allow leaders to assert themselves. Such growths seem to be an excellent opportunity for those legit ICOs that were not strong enough to ride the wave of investments.
We can think of numerous small projects that are being transformed and will reach indirectly more people.
Security Token Offering and Blockchain
To better appreciate the current situation, a quick chronological reminder: everything starts with the Bitcoin revolution and the simple but brilliant idea of the Blockchain that distributes trust across the network and secures its transactions. This new technology inspires geeks, whose alternative blockchains are born, offering new features. Everyone goes after their blockchain.
Then, as the price of Bitcoin increases, FOMO settles in, and start-ups rush to offer an opportunity to get rich easily. Creation of different tokens is what they present as improvements to Bitcoin. It is the escalation to the most inventive ICOs in which investors put their savings.
National financial authorities from all over – starting with Switzerland – wake up and decide to bring order to all of this, recalling and slightly adapting the old rules that already applied to traditional financial markets.
Token issuers are accused of wanting to circumvent the regulations on the issue of securities and enrich themselves by selling worthless “disguised shares.” Proposing a somewhat theoretical and artificial distinction between utility and security tokens creates a safe ned for startups and their ICO.
The current situation is paradoxical because there are token issuers who are willing to sell up and down. On the other hand, regulatory bodies setts in motion rules and regulations to guide this trend in the right direction. Such type of investors want to sell as soon as possible, and not in the long run of technology.
Most of the ICOs investors turn to a more CFD strategy in which they buy on a low price, and as soon as the coin is worth more than it did when obtained, they sell. Well, this was never the idea of an ICO, and it does betray a bit its meaning.
Tokens and doubt
Eventually, the prices of some alternative tokens and crypto-currencies fell. Also, their activity (number and volume of trades) showing no sign of hope of an upward recovery.
After unbelief and doubt settle we return to fundamentals more accustomed to our needs. Investors want to speculate on stock price variations, so instead, we are focusing on “security tokens.”
Like a layer of fresh paint meant to solve everything, these chips are only a digital version of traditional instruments. The reason is that themselves are already digital, with the sauce “Blockchain” to attract the curious. However, we must follow the usual financial rules where the barrier for token issuers is significantly increased.
The main (theoretical) interest of the ICOs was unregulated and global universal access to a new form of technology exchange and investment exchange, which is now gradually being replaced by a new form close to a “light” version of the traditional IPOs operated by banks, now called the famous STO, “Security Token Offering”.
However, these STOs are not an evolution of maturity of the ICO, but rather a return to something already existing. We have moved from pen to ballpoint pen, but the principle remains similar to cuneiforms on clay tablets.
The Security Token Offering is not a grand revolution
At best it is the official acceptance and appropriation of the Blockchain by the established finance sector. This is already a significant improvement compared to what was being said not so long ago.
For the sake of comfort and ease, we have put aside the ambitions and technological opportunities of crypto-active and Blockchain. Also, we have reduced this to its most basic form on the course of which it is easy to speculate.
The crypto-actives, whose massive technological and social potential, developed a few months ago.
A recent example illustrating this trend is Swissquote which has just announced the piloting of the ICO of a young shoot from the EPFL, which they will sell the chips. Presented praisefully as “utility tokens” that will give access to machine working time, the ultimate goal is obviously to offer Swissquote customers the opportunity to speculate on price volatility, as they would with securities or foreign currencies.
Utility chips used as investment tokens that they are not real, the confusion remains neatly maintained. Click HERE for more information.
These tokens do not represent capital shares of the startup, and will not likely be exportable outside the Swissquote portfolio.
Alternating advances and setbacks in the evolution of Bitcoin and Blockchain are reminiscent of waves on a beach.
It’s a normal evolution, and you do not have to worry or complain. Historically, technological revolutions frighten people as much as established industries, which therefore prefer to fall back on their reassuring habits.
While waiting for them to become essential at all levels, let us savor the patient spectacle of their development.