Security Token Offering as a Blockchain-Based Alternative to IPO

Dec 06, 2019 at 08:31 // News
Coin Idol
 Is there a good blockchain alternative to IPO?

Whenever the venture capitalists or the public asks how it is possible today for a firm to gather capital for growth and development, the first thing that comes into consideration is an initial public offering (IPO), which is the process that it is popularly regarded as the opening of social capital to the public.

However, if people believe that the IPO is the only way, then they are definitely making a mistake. We shall also talk about the case of the Security Token Offering (STO), in the blockchain and distributed ledger technology (DLT) field.

Characteristics of an STO

The capital requirements of commercial companies are met mainly by drawing on external sources, such as debt capital and share capital. 

Debt capital rotate from loans from groups, family and friends or banking institutions at the expense of interest payments, while equity capital is increased by the sale of firm shares in the open market. Yet it is now possible to circumvent these traditional methods thanks to the arrival of Bitcoin and many other popular cryptocurrencies.

STO, i.e., the public offering of security-type coins, is strengthening its power and position in the existing crypto platforms, ultimately increasingly being able to boast legal compliance. If all goes well, STO souk is anticipated to see huge improvement by 2024, because it is forecasted to reach a valuation close to $10 trillion. 

The concept behind the STO includes a token that represents a smart investment lawful contract, which stores on the DLT the particulars of ownership of actual stocks, funds, companies, properties or obligations.

Some of the characteristics of a STO are: continually supported by a real resource; is an overlay of Initial Coin Offering / IEO and IPO as the property right is taken as a coin rather than a paper document; and there is a generous supervisory structure to follow to produce an STO.

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