ICO benefits for cryptocurrency market
Many experts believe that the popularity of initial coin offering (ICO) projects has already passed. Today such startups raise 97% less funds compared to not so long time ago - 2017. This means that traders' trust in blockchain projects is fading. Is there any alternative to ICO cryptocurrency?
What is the purpose of ICO?
Issuance of own tokens and their exchange for popular digital coins or fiat money offer a great opportunity to raise the investments that are essential for a project start or development. In most cases, initial coin offering was carried out at the earliest stages, before the extensive infrastructure was created. The received money was used for development, marketing research, and financing of special funds. Investments were based solely on the reputation of people behind the startup.
Fraud is one of the biggest risks, leading to decrease in popularity of investment projects nowadays. Many startups were closed and have never released their products. The American Securities and Exchange Commission considers tokens as securities; so many projects have been classified as prohibited for non-compliance with the law.
Despite these problems, it is too early to state an absolute decline of this market. Attraction of investments in the form of cryptocurrency only begins its formation; it evolves and transforms. We offer you an overview of ICO alternatives.
IEO - initial exchange offering. It offers high degree of safety for the investors, since it is the responsibility of the platform to distribute the tokens. Projects do not conduct ICO and do not start the raising of digital fund; the platform carries out a thorough check of legal and financial aspects. The positive result is a listing, which guarantees compliance with exchange requirements and increases the likelihood of return on investment.
The peculiarity of IEO consists in a fact the investors cannot overstate the fee (gas). In ICO, it was done in order to become the sole buyer and get more income. This approach does not work through the exchange, which is considered an advantageous parameter for the startup.
STO is the highlight of this year. This option can solve the problems with vulnerability of traders' rights, high risks, and pressures from the regulators. Such startups fully meet the requirements of SEC, because the attracted funds are protected by law. Therefore, if there are any disputable issues, investors can appeal to special bodies with a complaint. The potential and viability of the project are guaranteed by control from the government and open legal framework for its functioning. Therefore, analysts consider such tokens the best tool to return the relevance to the digital market.