As security-tokens has replaced the utility-tokens
Recently security-tokens began to attract more and more attention from both investors and startups. Why, apparently, they will be the favorites in the coming years? What are the advantages of security tokens and how they will be applied in the future — to understand the material.
Laundry-token is the user tokens or coins applications that represent future access to the product or service of the company. A defining characteristic of these tokens is that they’re not meant for investment.
Creating utility-tokens, the startup can sell “digital coupons” for their services, as, for example, retail sellers of electronics are taking pre-orders for video games.
If the token is a traded asset, it is classified as a security token and becomes a series of securities. Improper use such tokens as securities may result in sanctions by regulatory authorities.
Many industry observers believe that major companies will one day release the shares using. ICO instead of or in addition to traditional public offerings.
The sunset of the era of utility-tokens
2017 was marked, in addition to the ICO boom and a huge number of blockchain projects, the extensive use of Laundry tokens. Unlike security tokens, which equates to SEC securities, Laundry-tokens don’t need a complicated legal procedure for registration. Their results during the ICO has allowed startups to quickly and easily conduct a crowdfunding campaign. Investors with a liking for anonymity and the absence of barriers to convert cryptocurrencies.
Thus, the year 2018 was a turning point for the cryptocurrency market. During this time there have been two serious reduction in the price of bitcoin. At the same time, many countries to determine the legal status of digital currency and adopted the laws regulating their treatment. This allowed us to attract institutional investors to the ICO and to enhance the credibility of the project goals.
In early 2018, many people realized that the market is changing, and will no longer be “easy investments”, therefore it is necessary to “seize the moment”. All this became the reason for the phenomenal number of ICO in the first half of the year, most of which were unsuccessful, much was said of a symptom of the decline of the cryptocurrency market. Despite the fact that this period was a record amount of funds raised via the ICO, it is impossible not to notice the loss of confidence of investors in coins-tokens and blockchain-related projects.
Interestingly, in recent years, many major crypto currency exchange do not add a new cryptocurrency. Other exchanges — often not very popular — is prepared to accept any tokens, but for a fee. The price of the listing starts with about 10 bitcoins. Others do not charge a fee for listing, at least officially, but due to laws regulating the circulation of securities, they require that the status of the token has been legally certified. Not to mention the fact that listing requires registration and compliance with many other formalities, depending on the country in which the registered project.
What to expect in the future?
The General trend is that, apparently, the number of utility-tokens on the market will decrease, and in the future expect a boom of security tokens.
“Since ICO is used for pump and dump schemes, investors are becoming increasingly harder to establish trust and invest in any cryptocurrency project,” complains one user of the Bitcointalk nickname Tosyn2.
In addition, in the opinion of a number of projects, the issuance of security tokens during the ICO are much more honest in relation to investors, because in this case investors can count on a long-term investment returns. On the other hand, loss of interest in utility-tokens can be caused by the fact that most of the blockchain projects, where these tokens were supposed to be working, was just useless and unnecessary. Simply put, it stems from the General disappointment in the blockchain and the possibilities of its use in the real world. In other words, if some problems blockchain will be finally solved, Laundry-tokens will again be in demand.