You will find it surprising to know that the amount of money made through Initial Coin Offering (ICO) in 2017 was doubled during the second quarter of 2018. It has been revealed that over $13.6 billion has been raised by these ICO’s since the beginning of the year. This clearly shows that these fundraising means is here to stay. This increased figure has made more people interested in carrying out ICO’s and also in investing in them.
Initial Coin Offering is basically a way which start-ups in the blockchain and crypto sphere are able to raise capital for their various projects. It is done in such a way that investors would have to buy a specific amount of token which will give them access to the platform once it has been developed. STO’s (Security Token Offering) on the other hand, refers to the raising of capital for projects in compliance with the United States Securities Law. The main difference between these two fundraising means is that STO’s comply with Federal Securities laws which ICO’s do not comply. Another difference is the word “token” and “coin” that is used in each.
With ICO projects like Filecoin, Status, EOS, Bancor, Waves, Tezos, and others have experienced great success in their various coin offerings, other projects have been motivated to carry out ICO’s. Being the most successful money-raising opportunity, ICO’s and STO’s could help raise money in the future. You may wonder how.
1. They spur investors;
Although in the last couple of months, the Securities and Exchange Commission (SEC) have looked into the activities of these ICO’s, the growth rate and the amount of funds that have been raised just this year has motivated more investors to flood into the market. For STO’s, the legal backing and support they have encourage investors that they have a clearer and a more understandable blueprint. The legal support that these STO’s enjoy and the amount of capital that has been raised from ICO projects would definitely encourage investors to invest in them, thus, raising money.
2. Collective investment;
One of the leading features of STO’s and ICO’s is that they are invested collectively. This is a way that could raise money. Having a large number of people investing in projects would definitely mean that enough money is raised to kick-start the project. Being value providers, ICO’s and STO’s would offer investors the opportunity to have access or own part of the project when they buy coins or tokens during the coin sale period. The opportunity to use or become a member of the platform’s community would definitely mean more people would invest and therefore raise more money.
Most experts in the crypto sphere have predicted that next year, the amount of capital that would be raised from ICO’s could triple. Also, with STO’s gaining much popularity because of their nature, it will definitely raise about double of what it has raised in the last couple of years.