If you’re familiar with terms like Bitcoin, Blockchain and Altcoins, then by now you should now what an ICO is. What you many not know is that there’s actually another more convenient, safe and trustworthy option for early investors called STO.
By the end of this article, you will now the difference between an ICO and STO, and know how to avoid scams, taking the easy route into the best STOs to invest in 2019.
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Know your Token Category
There are many tokens being created since 2013, and it’s fairly common to get confused with the terms and their meaning. To clarify, you can see the difference between all of them below:
What is an STO?
STO is the acronym for Security Token Offering. The concept of STO came with the necessity of regulations in the crypto market.
Since there’s been many over-inflated ICO’s that have left their investors empty handed with the so called ‘exit scams’, the regulatory offices like SEC sought out a solution, and came up with the STOs.
A security token is an investment product or a financial instrument that has backing by a financial institution for an actual tangible asset.
To simplify, if a company offers a financial instrument that has monetary value, their investors can buy a share of it, and the transaction is recorded on Blockchain.
This means that their new owners will have the proof of ownership imprinted as a transaction on blockchain, and the representation of that new contract will be the security token.
What is an ICO
The acronym ICO stands for initial coin offering. ICOs were made intensively popular in 2017 till the end of 2018. What an ICO consists in, is a crowdfunding project, where the early investors gain natural digital currencies or tokens as incentives for investing.
These companies run their projects on the blockchain technology, which means that as a pre-requisite, an ICO has their own currency or token to distribute to their investors (shareholders).
Since there are no regulations in the ICO market, a lot of these projects have left people empty handed in their “scam exists”. There are many popular scam icos, and many great projects which unfortunately never got completed due to lack of investing or discontinuity of the project.
How do I know if an ICO or STO is a scam?
Just like an IPO, ICOs are shares of a cryptocurrency that are offered to the public in order to raise funds to their launch.
ICOs have blossomed during early 2017 and 2018 and the concept has yet again evolved to another stage, an STO.
There are many popular listings websites which offer this service. These websites usually contain all the information about newly coming projects into the market.
An ICO or STO should usually contain the following information:
STO VS ICO – Which is a Better Option?
Although both are very similar, there is a big point that is crucial between determining the type of project.
STO VS IPO – Which is a Better Option?
STOs and IPOs are very similar. In fact, one could say that an STO is the digital version of an IPO. ICOs can also be called a digital version of an IPO, but then they would be the unregulated and unsafe option.
Before listing the differences between an STO and an IPO, it’s important to understand the way the process usually goes for both.
On the investor side, for an investor to acquire a share of an IPO, they would need to contact or be contacted by a broker who would then sell and seal the deal for the share. For an STO, the users can buy directly with the regulated companies on their website, and the transactions become then validated on the blockchain.
On the Company side, for a company to sell an IPO, they would normally need to deal with lawyers and stock brokers until they finally reach the investor. There’s only so many fees that they need to add in the price of the IPO to sell to the general audience. With STOs, the users just need to deal directly with the company on their website and everything is registered on the distributed ledger (blockchain). The Smart Contract generated then becomes the proof of purchase.
Celebrities that endorsed ICOs
If you have been around in the 80s and 90s, you will know what Kodak is. In case you don’t, Kodak is a photography and printing company that specialized in the photography.
Their business was reliant on their registered patent, and on providing the photo cartridge for the cameras.
Sadly Kodak has to file for bankruptcy in early 2000’s, as their business model didn’t follow up with the latest technology.
In 2017, however, Kodak reinvented their brand and launched kodakcoin. Their hard cap was raised during pre-ICO and whitelist, and it never went into general crowdfunding.
Ethereum was the first altcoin to have an economical importance like bitcoin.
Ethereum, for years, was compared and even said to be the sucessor of bitcoin but in reality the two are completely different.
Ethereum’s platform and technology has actually been used as the technology behind most ICOs, STOs and dApps.
The ERC-20 token, a technology that is compatible with ethereum’s code which is mostly used by crowdfunding blockchain companies, has been crucial to the expansion of this market.
EOS has been a very promising altcoin since before it was actually born.
Its funding was one of the biggest in the history of crypto, and at one point, the amount of ethereum it raised on its crowdsale was 20% of the total amount of ethereum circulating.
EOS’s blockchain is ideal for running dApps.
ICOs to look out for in the future
Although the concept is slowly losing its traction, there are still companies that consider creating an initial coin offering or native currency. Mostly of these ICOs come with the promise to bring a service provided for their currency, but if you want to be an early investor you should definitely look out for these.
You can find a a few ICOs to look for in the future below:
The social media giant created by Mark Zuckerberg Facebook has already announced plans to launch its own native currency.
This is not the first time that Facebook adheres to the concept of tokens, as some of the apps and games inside their platforms have a pay to use or subscription model, which exchanges currency for virtual currency.
It must be said though that recently Facebook has been involved in a lot of negative events regarding its business model, which shares information with companies to provide them personal information about their users.
Not only that, but Facebook has lost a lot of market share and their stocks have lost a lot of value in 2018.
Who knows if by launching an ICO Facebook will be able to fit their business strategy? It’s best to observe news on facebook and crypto.
JP Morgan Coin
The JP Morgan coin is an utility token created by the bank J.P Morgan.
Although Jamie Dimon, the CEO of the bank has explicitly criticised Bitcoin and cryptocurrencies, it appears that they cannot help but to follow-up on the technology and competitiveness of the crypto universe.
JP Morgan went public with news regarding its native currency which will be used for transactions inside the bank. According to their press, they have already tested a prototype and it should soon be ready for the official launch.
What is the best ICO to invest in 2019?
The best ICO to have invest in 2017 would have been EOS. The best ICO to have invested in 2018 would have been Nagacoin. The best ICO to invest in 2019, and which users should look out for is the Facebook Coin.