ICOs might have become more mainstream recently, but along with this increase in popularity, a bevy of issues have become apparent. For one, there’s been increasing talk about the fraudulent activity at work behind many ICOs. What’s more, the relatively low success rate of ICOs continues to hang heavy over entrepreneurial efforts. While some argue such issues are part and parcel to the infancy of such endeavours, others have suggested an alternative route to funding blockchain development needs to be found.

Security Token Offerings (STOs) enter the picture

Despite the chatter surrounding fraudalent activity and the problems ICO face in the light of impending regulations, the statistics in their favour can’t be ignored. ICOs have fuelled the blockchain boom with billions in dollars of capital, but many insiders still think there’s a better way to tear ahead.

Generally speaking, ICOs usually function by companies offering tokens or coins to investors. With STOs however, investors are free to buy tokens during the offering stage that they can later sell, trade or hold on to so they might accrue value. Unlike conventional ICOs however, security tokens boast financial securities. This is a huge advantage over the norm, with tokens now actually reinforced by something real, whether it be actual assets, company revenues, or future profits.

STOs explained

Going into 2019, seems likely we’ll see a huge upswing in the presence of STOs. In fact, it’s possible that STOs will quickly replace ICOs as the standard. The reasons for this are obvious. Chief among these reasons is that there’s a very reassuring level of security for those investing, drastically reducing the chance of things like fraud occurring and ensuring that assets, for the most part, are protected.

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The blockchain realm evolves

Nowadays, it’s all but impossible to deny the necessity of ICOs. Because of the commonplace nature of ICOs, it seems as though STOs will be looked toward as the new standard in many instances. As it stands, cryptocurrencies and ICOs have to ultimately accept a compromise when it comes to securities. While this is considered acceptable risk by many, there’s a significant number who refuse to engage with something with such a shortcoming. Certainly, as more mainstream corporate entities dip their toe in the crypto world, assurances on security will become a perquisite for engaging with anything blockchain related. As such, a move into STOs and a distancing from conventional ICOs seems all but assured.

How startup funding can fail

Getting an idea off the ground with early funding has become a huge issue for startups. Even the most innovative of ideas have faced huge obstacles in clearing capital to move ahead when it has come to acquiring initial financing. It’s no surprise that the startup culture has embraced ICOs in many instances, with them giving hope to endeavours that would have struggled to have even been considered by conventional investors and a real launching pad for those ideas struggling with a bottleneck situation. As dencentralied platforms become more the norm, it’s becoming apparent that STOs could be the way forward for those looking for the business model of tomorrow.

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Many still have reservations about ICOs, whether that be fear of losing out to pump and dump scams or other fraduelant activity. Unlike ICOs with their inherent risk, STOs present investors with a safer alternative, giving reassurances in regards to common concerns right from the off. As the rate of ICO scams continues to rise and nefarious activity becomes ever more commonplace, the safer pick that STOs provides seems like a no-brainer. What’s more, as regulation looms heavy on the horizon for the blockchain realm, STOs could be an ideal way of future-proofing the blockchain against strict compliance requirements and regulatory bodies. Certainly, in many individual sectors, STOs will be the preferred option to crowdfunding, leaving ICOs and their uncertainties a thing of the past.

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