ICOs? STOs? IPOs? Know the Difference
By: Fiat Exchange
Most of us know full well that security token offerings are regulated public offerings, but then what's the difference between it and the other two? Is there good reason for doing an STO instead of an ICO or IPO? Well, let's start with the latter. Initial Public Offerings, as a financing model, has been around for a long long time. So long ago it was that the first ever IPO was conducted 400 years ago, in 1602! As such, this means that it's the go-to option for established companies to raise capital. This also means that IPO has a certainty as a fundraising method (not that they never fail) which has proven itself through times.
Now let's discuss the other two. One might be hard-pressed to think that Security Token Offerings and Initial Coin Offerings are largely different but they're actually rather similar. So similar that in order to understand what an STO is, we must first understand what an ICO is. ICOs, simply put, refer to a token offering from a company or organization in order to raise capital for a certain project. Their buyers are then issued digital tokens in exchange for real money, which becomes a cause for concern as ICOs are largely unregulated, thus putting investors at risk (make no mistake, many investors focusing on blockchain and cryptocurrency-
STOs, on the other hand, are heavily regulated, providing any necessary infrastructure and services which are required for the market to function properly. All of which are generally licensed activities. The concern herein lies in the security ICOs lacked. It's a given that all the licensing and compliance will take time and capital.
So which option do you think is the best course of action? Nowadays, many more insiders are starting to believe that STOs can and will disrupt IPO and ICO markets and while they do have a point, it's always wise to research and make your own conclusion on each matter.
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