Who Will Benefit from the Evolution of ICOs into Security Token Offerings?

ICOs have come under fire for a host of reasons, and are now slowly making way for Security Token Offerings. This article discusses STOs and their advantages.

A lack of liquidity is the main reason for the slow development of crowdfunding and other types of fundraising. To date, only peer-to-peer (p2p) platforms have established a secondary market to resell loans.



However, there is no opportunity to resell the stocks which an investor has accumulated through investing in crowdfunding platforms. As result, less than 5% of the alternative finance in the world belongs to equity-based crowdfunding and 95% of the turnover currently resides at p2p lending platforms.

The recent rise of Initial Coin Offerings (ICOs) has shown that the traditional stock exchanges and crowdfunding platforms are unable to meet the demand from new early-stage issuers and global investors. Additionally, the ICO market wouldn’t exist without the possibility it offers for the exchange of tokens and their liquidity.

From a legal and financial perspective, ICOs are, however, not the best example of blockchain-based investing. Moreover, misuse of ICOs could discredit the use of blockchain technology in the investment sector in much the same way as bitcoin discredits the use of blockchain in the traditional monetary system.

In the ICO process, both companies and investors should understand the risks that are associated with a “trap of the coin economy” – a company which has issued tokens is limiting almost to a zero ability to earn revenues directly from their main business activities, not, as they do, indirectly from the crypto exchanges where their coin is traded.

In case the company gives too much power to the token on its platform, this results in losses to its equity investors. Investors can expect the dividends to be based on token sale revenues, as opposed to the company’s actual business activities.

This model is impossible to scale sustainably, as the number of ICOs grows and the liquidity decreases. There are two potential ways out of this dilemma:

• Utility tokens/coins have to be limited in functionality to allow for main services still to be paid in liquid currencies and thus generate a sustainable revenue stream for the team and shareholders.
• Innovative companies that aim to build sustainable revenue-generating businesses may choose to raise funds through a Security Token Offering (STO) instead of ICO. It is true that most traditional businesses and start-up’s consider the issuance of tokens for crypto fundraising reasons, these are the most suitable for the issuance of equity type tokens.

Companies that offer for sale tokenized shares and debentures are more attractive from an investment perspective, trustworthy in legal terms, economically sustainable in the long-term and eligible for investments by traditional funds.

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After a year of opposition between regulators and crypto innovators, finally, we can see that the ICO is evolving into STO. These offerings will be conducted on the emerging regulated platforms that facilitate trading in tokenized securities. Corporations and start-up’s will thus have the opportunity to issue their tokenized shares and bonds to a greater number of fiat and crypto investors. Fiat investors will hence get the necessary liquidity for their private investments, while crypto investors will obtain legally compliant tokens, which actually represent their share in the companies.

When investing in security tokens, investors are interested in sustainable companies with a solid [potential] generation of revenue from their business activities, experienced operational teams, a business plan with financial projections, as well as the legal standing of the security token issued on the platform which is conducting the STO and the legal status of the platform itself. Most investors prefer to invest in countries with English law, like the US and the UK, where investors experience the greatest protection.

Fundraising through tokenized equity, debt or reward empowers SMEs and start-up’s to connect with investors and other interested parties at any stage in the company’s growth phase and hence raise the necessary funds faster.

By choosing regulatory compliant fundraising platforms for their STO, companies can receive the full spectrum of services out of the box – security token issuance, exchange listing, investor on boarding (KYC, AML, accreditation), and management of future dividends or interest payments.

While a new more sustainable security token economy is evolving, there are not many platforms that are ready to offer compliant STO services. There are tZero and Polymath in the US and Canada, respectively. And in Europe, HighCastle is the first to be offering technological and legal infrastructure that supports a compliant Securities Token Offering and Reward Token Offering, to be launched under the auspices of the UK securities law framework.

HighCastle blockchain-based protocol is designed to tokenize and enable smooth trading of private securities, which stimulates the liquidity of private investments and opens access for private companies to over $18 trillion of individual and institutional capital vs only $12 billion available to ICOs. In contrary to private venture fundraising, companies get a fair access to a much broader pool of global crypto and fiat investors, an opportunity to raise funds faster at lower cost and higher valuation of their company.

Around 20 new ICOs appear on the market each day. Most of them are simultaneously listed at the HighCastle Marketplace. At HighCastle Exchange, those and other companies, on their own or with the help of HighCastle’s Authorized Advisers, have the opportunity to launch an STO.

Thus, companies have the potential to fundraise global capital easier and faster through the STO, whilst they can choose to stay registered and located in their home country, supporting their domestic economy through global expansion and internationalization of local businesses and innovators.

For innovative companies and traditional businesses that want to leverage their sustainable and long-run growth, HighCastle has created a platform where they can undertake an offering of their tokenized securities, giving an opportunity to investors to hold traditional shares or bonds in their crypto wallets. The use of blockchain in capital markets is unlocking a new opportunity for investors to trade and participate in the private securities market.

This new emerging model of tokenized fundraising and trading ensures that securities issued by promising developing companies can be accessed by crypto and fiat investors, both retail and institutional investors, who can invest through highly-compliant and regulated platforms.


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Crypto Coin Graveyard Fills Up Fast as ICOs Meet Their Demise

  • More than 1,000 coins declared dead by website Coinopsy
  • Investors have already lost billions to failed crypto projects


That mournful sound you hear? It’s the funeral procession of yet another cryptocurrency.

As the digital money frenzy of the past few years cools, the crypto coin graveyard is filling up. Dead Coins lists around 800 tokens that are bereft of life, while Coinopsy estimates that more than 1,000 have bought the farm.

The carnage is mostly the consequence of failed projects from the thousands of startups that used initial coin offerings to raise billions in funding, and a global regulatory crackdown on questionable practices and scams. Names like CryptoMeth, Droplex and Roulettecoin may have been a clue to the coins’ dim prospects.

“There has obviously been a lot of fraud and hype in the ICO market,” Aaron Brown, a business author and investor who writes for Bloomberg Prophets, said in an email. “I accept figures I have seen that 80 percent of ICOs were frauds, and 10 percent lacked substance and failed shortly after raising money. Most of the remaining 10 percent will probably fail as well.”

 

Fate of Coins with $50 Million-Plus Market Caps

Fewer than 4 percent of ICOs raising from $50 million to $100 million were successful or promising, according to a March analysis from ICO advisory firm Satis Group. Most ICOs were raising money without having an experienced development team or an actual product, just white papers studded with promises.

Blockchain startups are faring worse than their counterparts in other industries. Of 103 companies that received initial seed or angel funding in 2013 and 2014, only 28 percent managed to raise additional funding, according to CB Insights’s October report. That compares with 46 percent of the 1,098 tech companies that raised a second round in the U.S. between 2008 and 2010. Among tech companies, 14 percent went on to a fourth round, while only 2 percent of the blockchain companies did, the researcher found.

“I don’t think we found the killer app yet,” said Arieh Levi, an analyst at CB Insights. “It just seems like there’s been a lot of projects tried, but there aren’t really many users of blockchain protocols beyond speculators and traders.”



The failed projects have cost investors billions. Barring outliers like BitConnect, which saw its market cap shrink to about $4 million from nearly $3 billion in December, most of the ICOs that birthed these coins were relatively small, but investors may have still lost as much as $500 million, estimated Lex Sokolin, global director of fintech strategy at Autonomous Research LLP.

The book of the dead is expanding rapidly now that prices have collapsed across the crypto market. The industry’s bellwether, Bitcoin, is down 57 percent this year. And the number of articles declaring its demise is up to 319 since 2010, according to 99Bitcoins. About 80 percent of the 1,586 coins that surveyor Finder.com looked at declined in the week ended June 25, by an average of 19 percent.

“We will see a lot more abandoned ICO that never make it to an exchange,” Richler Vanierwitz of Coinopsy, said in an email. “ICO investment will become very unprofitable.” ICOs have raised $11.75 billion this year alone, according to CoinSchedule.

But there is always the afterlife.

A new breed of crypto undertaker sees this as an opportunity. Startup CoinJanitor has partnered with Dead Coins, saying it wants to help investors and developers recycle failed coins with market caps of under $50,000.

“We take as many coins off the market as possible,” CoinJanitor Chief Executive Officer Marc Kenigsberg said. “Every time we absorb a project, we have more audience and more marketing reach. Instead of linear growth, we should hit some kind of hockey stick growth. All the tokens we get we destroy, we actually burn them. Turn off the entire blockchain.”

CoinJanitor plans to take over dead projects, and to burn the dead coins. To do so, it’s created its own token.

“Last year, there were many instances where a project that was essentially ‘dead’ was picked up by a developer, who might have been passively mining it, and brought back to life,” Lucas Nuzzi, director of technology research at Digital Asset Research, said in an email. “Out of nowhere, a new version would then come out and the price appreciated, regardless of the substance of the changes made by the developer. This has not happened frequently this year, and it’s hard to discern what are valid inflows versus potential spoofs.”

Alas, most of the dead coins remain in the grave.


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!
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Top 10 ICOs to Watch in Q2 2018

Q1 2018 has been a slump of the most abysmal proportions, with prices and moods sinking to all-time lows. Despair is in the air, yet the ICO express carries on full-steam ahead – destination: decentralized economy.

Despite Q1’s heartbreaking downturn, Q2 is positively littered with promising projects, making investors as paralyzed with indecision as a starving adolescent in a candy store. The current bear market requires calculated decision-making to reap the utmost benefits, so here are 10 ICOs that we are keeping an unblinking eye on.

Neonexchange (NEX)

The hacks are getting bigger, the scammers bolder, making for a growing list of dishevelled crypto-junkies out there who’ve lost thousands on centralized exchanges. Decentralized exchanges, or DEXs, tout security advanced enough to make the Pentagon look like a mom-and-pop convenience store, but they just aren’t fast enough to cut the mustard.

Combining the benefits of both varieties of exchange, NEO-based NEX is without a doubt one of the hottest ICOs of Q2, if not 2018 in its entirety. Think the speed and usability of Binance, but less “Mt. Gox” and a little more “Fort Knox.” With a stampede of NEP-5 projects on the horizon, anyone that got into their crowdsale lottery should be following in the footsteps of our friends Neil and Buzz.

Block Collider

As far as hitting a home-run ICO goes, it’s no secret that hype counts for more than your average blockchain developer would like to admit. Refreshingly, a few quality projects go against the grain and opt to slink under the radar of the uninformed, avoiding all talk of the fabled “lambo” and the inevitable dump that goes with it.

Block Collider is one such underdog with only a modest social media following. Their “multi-chain” allows interaction between 5 blockchains, namely Bitcoin, Ethereum, Waves, Lisk, and NEO, with later addition of chains to be decided by the community’s vote. Transfer value between chains, accept payments for your ICO in whatever crypto you see fit, trigger an Ethereum smart contract with a Bitcoin payment – Block Collider does it all.

With interoperability being one of the buzzwords of 2018, the humble $7 million Block Collider token sale has every reason under the sun to become an A-list celebrity if it indeed delivers its “mineable multi-chain protocol” as promised.

Metronome

The long-awaited Metronome project takes the whole cross-chain concept to new heights, having designed a portable coin that can be used on a number of blockchains. Where blockchains come and go, MTN will survive for all eternal glory, or so goes the idea. With cross-chain communication fast becoming the Holy Grail of blockchain, a truly portable token could well de-rail its competitors, who instead are building ecosystems that host interaction between chains (think WanChain or ICON).

Metronome’s sale dates have been shifted about, yet the project’s hype remains insuppressible. With their ICO being pushed back from February to March to April, the team is now allegedly aiming for a May launch. Their unorthodox descending price auction will hopefully tame the whales and give the little guy a fighting chance.

Merculet

If you weren’t spending enough time on the interweb already, Merculet will actually pay you to keep your eyes glued to the screen. Their decentralized “Attention Value Network” rewards users for engaging with content, whether it be in the form of a share, like, comment, or just about any old ounce of digital love. Every company that participates in Merculet’s ingenious platform will have their own token, enabling them to reward their customers for engagement.

The project has backing from some absolute whoppers, with the likes of Fenbushi Capital, NEO Global Capital, and Krypital. In this digital day and age, we should see Merculet firing off the starting line without much trouble at all.

Edenchain

Korean blockchain projects always seem to gently float through the ICO stage, only to erupt in cataclysmic fashion once they hit exchanges. For this reason, EdenChain deserves a mention on this list, a smart contract-enabled “programmable economy” blockchain initially targeting the wired-up powerhouse that is Korea.

Yet, when you zoom in a little, things get really exciting, with signs pointing to Edenchain very well becoming Korea’s Ethereum. Their HelloEden ICO platform opens the gates to the anticipated frenzy of Korean blockchain projects. Throw that in the mix with a host of strong partnerships, and EdenChain’s $24 million raise will barely be able to satisfy the world’s insatiable appetite for tantalising Korean blockchains.

Kairos

Smile, your face is on the blockchain. In the brief but bountiful history of ICOs, investors have lapped up identity-verification projects faster than a cheetah pouncing on a limping Donald Trump. SelfKey, TheKey, Civicall sold out like hotcakes, but none have taken the coveted throne of identity verification.

US-based Kairos is taking decentralized facial recognition to new heights, migrating their existing facial recognition platform to the blockchain. We’re talking identity, emotion, and demographic recognition – as a 6-year-old business boasting a number of enterprises already using their product, this puppy ought to go down a treat.

The Abyss

The days of cash-grab ICOs are drawing to a close, as wary investors tire of projects that over-hype and under-deliver. In this vein, The Abyss will be the world’s first DAICO – another one of whizzkid Vitalik Buterin’s game-changing ideas.

The basic premise of the DAICO is to give investors more autonomy, allowing them to pay out funds incrementally as the project meets its milestones. Along with the allure of the project itself, its DAICO dynamic alone has landed The Abyss a healthy dose of acclaim.

A rewards platform for gaming, The Abyss dishes out its ABYSS tokens to developers and gamers for in-game achievements and referrals. Geared towards the addictive worlds of “heroinware” MMO games (think League of Legends, Starcraft), The Abyss will essentially pay you to “pwn noobs” and tell your friends to join the fun.

Sentinel Protocol

As hacks, scams, and frauds drag down the name of our faithful friend cryptocurrency, Sentinel Protocol is planning to take the lot out behind the proverbial woodshed. Their cybersecurity platform will monitor and prevent bad actions, protecting you from losing your precious ETH to that “admin” who so helpfully got you into the “pre-pre-sale.”

Harnessing the awesome power of machine learning, Sentinel Protocol will hunt down suspicious players and sound the alarm, blacklist their address from every exchange, and run them out of Dodge.

Typical of Singapore-based projects, Sentinel Protocol runs a tight ship that leaves no stone unturned, no eyebrow raised. After raising half their $22,000,000 cap without any marketing campaign to speak of, this is another quality project that any savvy investor would do well to consider.

OneLedger


If there’s to be one chain to rule them all, the armor-clad OneLedger is coming out swinging with its cross-ledger blockchain protocol. The platform allows businesses and lone players to create their own side-chains, whether public or private, all using OneLedger’s nifty protocol.

While the dynamics of these cross-chain projects might come across as all Greek at the best of times, you’ll be waxing lyrical once you come to terms with OneLedger’s mission: to make the process of onboarding blockchain technology easier for enterprises.

For the welfare of the entire blockchain industry, we want this project to see the light of day. Even if you’re not planning to invest, you’d do well to cheer OneLedger from the sidelines, confetti and all.

LendingBlock

While securities lending may not be the sexiest notion, punters are growing tired of the next “infinitely scalable” high-throughput blockchain. LendingBlock’s collateral-based crypto loan platform, on the other hand, has a market case as clear as crystal: seducing the likes of hedge funds, banks, and institutions into entering the cryptocurrency market. Ka-ching.

The project’s team sure knows how to whip up a feeding frenzy for potential investors; their kitchen is stocked with delectable treats. The team can boast of experience at Deloitte and Deutsche Bank, not to mention a hearty dash of time spent with hedge funds. Combined with VC-backing and a pipsqueak $9.5 million ICO, investors ought to be fighting tooth and nail to get into the first crypto-to-crypto securities lending platform.

Last Thoughts

As analysts pull out their hair staring at BTC/USD charts, Q2’s bear market continues to droop like a wilting flower. Armed with sheer bravery and bravado, the ICOs on this list are battling out this bear with all the fervor of DiCaprio’s gallant struggle in The Revenant.

While Q2’s monstrous grizzly may continue to toss values around like a rag doll, these 10 ICOs look to be in it for the long haul, backed up by quality projects that will surely emerge as battle-scarred heroes.


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Author: Jonnie Emsley
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