The crowfunding mechanisms that many companies have chosen as ICOs have had an important boom during 2017 and 2018. Many companies have been in a good start, moving positively after their respective ICOs, however it is also known that the occurrence of scams after many ICOs has been overwhelming. Given this, the Security Token Offers (STO) arise as a response to the need to provide a security guarantee to investors.
STO (Security Token Offering)
The main mission of the STOs is to provide investors with a reliable, transparent and secure cryptographic product that allows them to have a guarantee margin that responds to the eventuality of a collapse of the offer or operation of the company. The STOs seek to work enhancing the benefits of the blockchain technology at all times.
As a capital acquisition formula by art of the company that launches an STO, the STO is very similar to traditional capital shares, in the sense that investors have purchasing power and rights.
In ICOs, although investors also have an acquisition power at the outset, their rights in theory are limited to the acquisition of utility tokens, their exchange within and outside the platform where they are acquired, and their use within said scope platform. No aspect related to the security of the investment is reflected.
In companies with traditional capital shares, each share confers on its holder certain rights and obligations, among which are the right to vote in the assemblies, and receipt of dividends from the company. This is not observed in companies capitalized through ICOs.
Certainly the STOs arise as a response to the deficiencies and risks of the ICOs, for this reason their focus on security primarily. A company that launches an STO is obliged, among other things, to complete the traditional process imposed by the regulatory entities as when a public offering of shares of a traditional company is involved. This guarantees the legal due diligence of the company, and compliance with KYC / AML requirements.
Another important aspect in the STO is that related to the guarantee. Each company that launches an STO has collateral securities involved to serve as compensation in the event that the company goes bankrupt or even worse, until it escapes from the scenario. With this the affected investors will have the right to liquidate the possessions and tangible assets of the company, as well as capital and income to compensate the investment made by them.
When we look at the legal compliance and security aspects that STOs offer, they undoubtedly represent an important advantage over ICOs, and surpass them in terms of reliability and security in favor of investors.
In the rest of the way of participation, in an STO basically follows the same procedure as for an ICO. Those interested can buy the safety tokens in the STO during the offer and then can exchange, sell or maintain them with a long-term investment perspective.
To conclude, we can point out that STOs are the best alternative to ICOs for investors. A security token entails the participation of the guarantee for the investor, so you can be sure that your money will not be lost. STOs also provide sufficient legal and compliance legitimacy that is not observed in ICOs. We believe that the STOs will have a good future and we will see it during the months to come.