Tokoin.io – What kind of crypto coin will be minted next? How would it be designed, implemented, and kept under control to govern the revolutionary wave that can shake the concept of investing as we know now?
The Industrial Revolution 4.0 is marked with Internet implementation to business activities. The Internet has helped businesses to get easier access to their market directly, leading to convenient acceleration. However, the revolutionary movement of the 4th industrial revolution doesn’t stop there. In fact, digital networking has given birth and rise to a phenomenal invention, the blockchain.
The introduction of blockchain by the Bitcoin has brought blockchain to its heyday. A lot of companies held a public offering and hit their Token cap since blockchain became viral. The famous blockchain project has revolutionized the industry, from the first stage when it was introduced as an exchange commodity until today when it is utilized as a groundwork for the business model of securing valuable data assets.
Since it was introduced in 2008 and went viral in 2013, a lot of blockchain projects have been initiated. Since then, there are many steps to offer its crypto to the public. One mechanism that is well-known is the ICO (Initial Coin Offering), in addition to several other familiar ways.
ICO – Initial Currency Offering
ICO is a process to raise fund for a specific project in terms of crypto-currency, such as Ethereum or Bitcoin, in return for tokens that can be used for specific services or applications.
Similar to an Initial Public Offering (IPO), instead of money in terms of fiat currencies, some amount of crypto-currency is raised to support the project for ICO. In return, instead of shares, a certain number of tokens, which are built-in on a specific application using the blockchain technology, will be allocated to the contributors. These tokens can be traded on some private exchanges.
STO – Security Token Offering
Similar to an Initial Coin Offering (ICO), an investor is issued with a crypto-coin or token representing his/her investment. However, unlike an ICO, a security token represents an investment contract into an underlying investment asset, such as stocks, bonds, funds, and Real Estate Investment Trusts (REIT).
Security can be defined as a “fungible, negotiable financial instrument that holds some type of monetary value”, meaning an investment product that is backed by a real-world asset, such as a company or property. A security token, therefore, represents the ownership information of the investment product which is recorded on a blockchain. Differently, when someone invests in traditional stocks, for example, the ownership information is written on a document and issued as a digital certificate (e.g. a PDF). For STOs, the process is similar, but the information is recorded on a blockchain and issued as a token.
STOs can also be seen as a hybrid approach between crypto-currency ICOs and the more traditional initial public offering (IPO) because of the overlap between these two methods of investment fundraising.
IEO – Initial Exchange Offering
An Initial Exchange Offering is a token sale hold on an exchange. IEO works on different cryptocurrency exchanges depending on how it is planned. The exchanges create a platform on which the pool of developers can mint and sell the projects to crypto enthusiasts and investors!
To participate in this type of crypto investment, the public must first have to be a user of the hosting exchange. While ICO allows any contributors to buy the tokens for sale by sending funds into a specific address, an IEO requires contributors or users to buy the tokens by using the exchange’s accounts.
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