In the past two years we have seen the rise and fall of one of the most lucrative fundraising bubbles in history. in 2017 to 2018, over 14 billion were raised from what became known as initial coin offerings or ICOs. But since then the ICO boom has come to a screeching halt. Icos are no longer in favor anyways they're down 95.. Is this the bottom? The ICO market is gon na, be in a lot of trouble actually, and a lot of those ICOs will never make it back to the where they were eight months. Ago. In 2019, ICOs raised less than 370 million.. Why the sudden drop off Well, let's, just call it a trust issue.. The vast majority of them are either scams or underdeveloped, and people just seeking to raise money really easily. Without your bank, knowing it you've been using its reputation to burnish these ICO scams and selling them to customers. When you know damn well, the coins are worthless if they even exist in the first place.. You know, I guess I do understand after all, because for all the ICO mumbo jumbo, what we have here is an old fashioned pig in a poke. Lack of regulation.. This was the main reason behind the spectacular rise and fall of ICOs. Companies were raising millions by selling cryptocurrency tokens without having to comply with the time consuming and expensive procedures required in the traditional IPOs., With no regulatory framework to protect investors it's not surprising that many Of these companies just took the money and ran.
. What is the next big step in the evolution of crypto? Fundraising, I thought ICOs when they first came about were revolutionary, because the whole network effects and the ability to then grow networks and with them, the branch, effective network of network effects was pretty amazing, but they were very much misused and the whole trust went out of The market and we've been looking at how we can take that kind of decentralized constructs and unregulated exchanges on one hand, and then the traditional market infrastructure, on the other hand, and combine the two so that you bridge the gap between them because it's you have to For the foreseeable future, coexist. After people lost faith in ICOs, a new fundraising method appeared in the crypto, space., IEOs or initial exchange offerings. Our token sales conducted on the platform or a crypto currency exchange.. The exchange backs a project with the credibility of its name. By listing the token sale on its website, this is supposed to give investors a greater sense of security and give the project and established platform of exposure.. The exchange has the existing network of investors. They can handle the process they can handle the marketing they can handle. The money coming in. That in itself is a very, very interesting concept, because it can be much more effective to get to market much quicker for those project. Developers., The launch of BitTorrent on Binance in January this year seemed to promise a bright future for this new fundraising model.
. The token sale was a success. It ended in only 15 minutes with over 17 million dollars worth of tokens. Sold. Sounds great right. Well, maybe not.. The figures are misleading on IEOs, because everyone talks about and if we look at the data out there, that there's been a phenomenal amount of activity, but that's really been concentrated to a small number of large IEOs.. The enthusiasm for IEOs fizzled out pretty quickly. In 2019. Ieos raised only 1.6 billion dollars. still far from the 7.8 billion raised by ICOs a year earlier.. This is because IEOs did not actually resolve the credibility issues of cryptocurrency projects., Because a lot of these exchanges in their own right are unregulated and they say they're offering IEOs as the matter of trust, but by virtually being unregulated or having questionable balance sheets or processes.. You may think you are adding some interest wherein reality you are not.. Therefore, the very investors that got burned by ICOs see no different a construct in terms of that investor protection mechanism., In other words, IEOs, are just old wine in a new bottle. To earn back people's trust companies need to offer the security that only regulatory compliance can Provide but most startups lack the resources to go through the path of a traditional IPO.. When you look at IPOs, I mean the process is quite expensive and that's, not only in terms of legal fees but also corporate adviser fees and of all the intermediaries involved.
It'S very lengthy, it's, very detailed. It also requires a lot of overhead and capacity within the firm and that's why a lot of companies also defer from going private to listed, because the whole governance structure becomes completely different.. So if ICOs and IEOs are incredible enough and IPOs aren't accessible enough, Where does that leave us? It seems the ideal solution needs to be a middle ground between security and accessibility.. Perhaps STOs or security token offerings are that middle ground. Tokens sold in STOs are securities in tokenized form. This means the issuing company needs to fully comply with regulations before launching in STO.. However, STOs have an advantage over IPOs blockchain technology. By using blockchain STOs can save companies roughly 40 percent of their expenses in regulatory processing fees.. The whole idea of tokenization was to become more efficient and not be beholden to the existing establishment. Having an instrument identifying having the tokenized security that isn't international central securities depository or an international one is where we should really be going, But the groundbreaking novelty introduced by STOs is fractional ownership. Each security token corresponds to a fraction of a larger asset like a stock bond or commodity.. This allows small investors to participate in sales traditionally accessible only by large investors.. This is what's game changing, so the average person in the street can now have in access. If done the right way to these asset classes, it won't be long before you then see listed blue chip.
Companies also saying well, actually I may list and do an IPO, but I may also offer a proportion of my securities in tokenized form as well. Blue chip. Companies. Think companies like Walmart Coca Cola or Apple. Imagine if they tokenize shares of their company.. How would that affect standard business, fundraising practices? What would that do for cryptocurrencies? Are we headed to a world of tokens for everything and anything of value is translated into a digital tokenized security?