What is STO?
Why Security Token Offerings Could Be the Next Big Crypto Megatrend
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Over the past few months, we’ve witnessed a huge boom in the number of ICOs being offered. While many have been genuinely good opportunities, a small number have proved to be extremely problematic.The problem with ICOs isn’t just that many of them are scams — it’s also that many of the utility tokens offered are actually securities. As a result, they are violating the securities law in the U.S.In July 2017, the Securities and Exchange Commission (SEC) released a report stating that certain tokens were eligible to be classed as securities, and would, therefore, be subject to regulation.
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A security token is one that has been backed by external, tradable assets. One of the main applications of security tokens is that they grant companies with the ability to issue tokens that represent shares of company stock.These tokens are subject to federal securities regulations.A utility token represents future access to a company’s product or service. It is not designed to be an investment. A utility token might be best compared to a gift card, for example.The key difference between security and utility tokens is that security token holders are entitled to ownership rights, whereas utility tokens function as coupons and give holders no rights or stake in a company’s platform or assets.
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In order to determine whether or not a digital token is a security, we can apply the Howey Test. This is used to confirm whether or not a transaction qualifies as an ‘investment contract’.If it meets the criteria, then it will be considered as a security and will be subject to additional disclosure and regulation requirements.In order to be classified as an investment contract under the Howey Test, a token must meet the following requirements:
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The user is investing money (however, later cases have expanded this to include the investment of assets)
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The user expects to profit from the investment
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The investment is in a ‘common enterprise’ (this term has not been precisely defined. Many courts have used different interpretations)
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Any profit comes from the efforts of a third-party or promoter (if an investor’s actions have a large influence on whether or not the investment will be profitable, it is likely that the token will not be classed as a security)
Theoretically, should a token meet these requirements, it will be classed as a security token. Otherwise, it will fall under the definition of a utility token.However, there is still a substantial amount of ambiguity as to how the SEC will apply this test to cryptocurrencies.
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Almost all ICO tokens are expected to increase in value over time as a result of speculation and product development since the supply is fixed.Therefore, because most people buy tokens with the view of holding them as an investment, many projects are actually viewed as securities.As a result, all of these projects violate securities laws. This is frowned upon by regulators.
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More significantly, it can also reduce legal risk and provide protection for both the company and the contributors
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To fulfill this requirement, investors should meet one of the following requirements:
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An annual income of over $200,000 individually, or $300,000 with a spouse, maintained over the previous two years and with the same expectation for the current year.
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Net assets worth upwards of $1 million, excluding the primary residence (unless more is owed on the mortgage than the residence is worth).
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An institution with over $5 million in assets — e.g. a venture fund or trust.
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An entity made up entirely of accredited investors.
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Overstock has recently announced that one of its portfolio companies, tZERO, will be launching an ICO designed to fund the development of a licensed security token trading platform.
The tZERO tokens that are issued from this ICO will be in accordance with SEC regulations.
tZERO token holders will be entitled to quarterly dividends from the profits generated by the tZERO platform.
The launch of licensed security trading platforms like tZERO will drastically increase liquidity for security token investors.
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KODAKCoin — the cryptocurrency designed to power the recently announced digital imagery platform, KODAKOne — will be the first third-party cryptocurrency to launch on tZERO’s securities token platform.
KODAKOne is a blockchain powered photography platform. The KODAKCoin cryptocurrency enables professional and amateur photographers to receive payment for licensing their work, receive a share of the overall platform revenue, and sell their work through the secure platform.
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As it stands, there are only a few securities tokens in existence. It is likely that this is largely down to the difficulty of launching one.
Ethereum made it simple for startups to launch their own utility tokens. Now Polymath is aiming to make it simple to create securities tokens.
The platform can be used as a tool to allow financial companies to create and issue their own tokenized securities.
Polymath will be a fully functional marketplace where token issuers and token investors will be able to connect. Their securities token protocol embeds regulatory requirements into the tokens. These tokens will only be available to verified participants.
It will open up the blockchain to legally-compliant securities offerings and provide users with a decentralized protocol to simplify trading of security tokens.
ICO is Outdated, STO is the New Term to Fundraise with Cryptocurrencies
- As much as ICOs are beneficial for these startups, one cannot say the same for cryptocurrency customers. Hence, the Securities and Exchange Commission (SEC) has tagged it a fraudulent fundraising process.According to reports, the Chief Executive Officer of Overstock, Patrick Byrne, revealed that there is a new, safer strategy to raise fund in the cryptoverse known as Security Token Offerings (STOs).
- These STOs allow investors to purchase digital tokens as a public offering, just like it is done with the ICOs, but there is a clear difference. Unlike the ICO fundraising, these coins will be backed by the company’s assets, revenue, or profit. It is just like purchasing shares in a company but with more versatility.
ICO VS VC
- - 2018年四月時点で合計額が2017年のトータルを超えている (https://www.coindesk.com/6-3-billion-2018-ico-funding-already-outpaced-2017/?utm_content=buffer0b57e&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer)
- - ベンチャーも合計額が増え続けている (http://www.businessinsider.com/venture-capital-funding-peaked-in-2017-2018-1)
- -ICO VS VC
- ICOs are similar to IPOs and crowdfunding. Like IPOs, a stake of the startup or company is sold to raise money for the entity’s operations during an ICO operation. However, while IPOs deal with investors, ICOs deal with supporters that are keen to invest in a new project much like a crowdfunding event. But ICOs differ from crowdfunding in that the backers of the former are motivated by a prospective return in their investments, while the funds raised in the latter campaign are basically donations. For these reasons, ICOs are referred to as crowdsales.
- ICO
- An unregulated means by which funds are raised for a new cryptocurrency venture. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies
- When a cryptocurrency startup firm wants to raise money through an Initial Coin Offering (ICO), it usually creates a plan on a whitepaper which states what the project is about, what need(s) the project will fulfill upon completion, how much money is needed to undertake the venture, how much of the virtual tokens the pioneers of the project will keep for themselves, what type of money is accepted, and how long the ICO campaign will run for.
- An example of a successful ICO project that was profitable to early investors is the smart contracts platform called Ethereum which has Ethers as its coin tokens. In 2014, the Ethereum project was announced and its ICO raised $18 million in Bitcoins or $0.40 per Ether.
- Although there are successful ICO transactions on record and ICOs are poised to be disruptive innovative tools in the digital era, investors are cautioned to be wary as some ICO or crowdsale campaigns are actually fraudulent. Because these fund-raising operatives are not regulated by financial authorities such as the Securities Exchange Commission (SEC), funds that are lost due to fraudulent initiatives may never be recovered.
- VC
- Venture capital is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks and any other financial institutions. However, it does not always take just a monetary form; it can be provided in the form of technical or managerial expertise.
- n a venture capital deal, large ownership chunks of a company are created and sold to a few investors through independent limited partnerships that are established by venture capital firms. Sometimes these partnerships consist of a pool of several similar enterprises.
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The first step for any business looking for venture capital is to submit a business plan, either to a venture capital firm or to an angel investor. If interested in the proposal, the firm or the investor must then perform due diligence, which includes a thorough investigation of the company's business model, products, management and operating history, among other things.
Since venture capital tends to invest larger dollar amounts in fewer companies, this background research is very important. Many venture capital professionals have had prior investment experience, often as equity research analysts; others have Masters in Business Administration (MBA) degrees. Venture capital professionals also tend to concentrate in a particular industry. A venture capitalist that specializes in healthcare, for example, may have had prior experience as a healthcare industry analyst.
Once due diligence has been completed, the firm or the investor will pledge an investment of capital in exchange for equity in the company. These funds may be provided all at once, but more typically the capital is provided in rounds. The firm or investor then takes an active role in the funded company, advising and monitoring its progress before releasing additional funds.
The investor exits the company after a period of time, typically four to six years after the initial investment, by initiating a merger, acquisition or initial public offering (IPO).
- -ICO: Scam, no visible developmetn
- It joins a long line. In April of last year, there was Mumbai-based OneCoin, a once-lauded blockchain startup that was discovered to be a Ponzi scheme
- Then there was Confido, which disappeared after raising over $370,000. Don’t forget BitConnect, an anonymous cryptocurrency exchange that was accused of being a Ponzi scheme numerous times before it finally shut down.
- Prodeum asked investors to help raise as much as 5,400 ether—roughly $6.5 million—in an ICO. But after collecting what looks like less than the price of two Chipotle burritos, Prodeum disappeared. The company’s sparkly, professional-looking website was replaced with a single, trolling word: penis.
ETHモバイルウォレット比較
| アプリ | 日本語対応 | TouchID | 日本円対応 | メッセージ機能 | 特徴・気になった点 |
|---|---|---|---|---|---|
| Toshi | × | × | ○ | ○ | |
| Trust | ○ | ○ | ○ | × | モバイル非対応のdAppsは購入できないようにした方がいいかも |
| Cipher | × | ○ | ○ | × | |
| imToken | × | ○ | × | × | |
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ToshiとCipherが統合？
Behavioural Aspects of Cryptocurrencies
Popping The Bubble: Cryptocurrency vs. Dot Com
"There are two metrics I will use: speculation and application. We speculate on what application the asset will have, always contrasted by its actual application. The biggest bubbles always occur when the potential for disruption is enormous. This creates the largest discrepancy between the speculation and the application. This is why a new noise canceling headphone technology probably wouldn’t result in a bubble. The application of the technology is very clear — to drown out the cries of airborne babies — and thus, there’s not much room for speculation. We can base assumptions off the current headphone industry, and besides, the technology only affects one industry, so its potential for massive disruption is limited."
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