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Security Token Offerings: STOs Replacing ICOs?

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Security tokens offerings (STOs) are a regulated one and could possibly be the next big thing to be used as a tool to raise funds from the public.

The term initial coin offerings (ICOs) have become a synonym with mostly unregulated cryptocurrency market. As a result, there is skepticism that it is not a regulated one thus posing increasing risks. On the other hand, security tokens offerings (STOs) are a regulated one and could possibly be the next big thing to be used as a tool to raise funds from the public. The startups have always looked for funding from different segments such as angel investors, Crowdfunding and venture capitalists for their businesses.

 

New Method

In the last three years, a fresh method of funding has come into force, and different startups have even used a whitepaper in certain cases to raise funds. This was called as an ICO. The last three-year period has seen the ICO market generating $13 billion of money. Significantly, half of them came in the current year alone after the cryptocurrency market has hit dizzy heights in December 2017 when nearly all the coins have touched their life-time highs.

However, even the amount raised in 2018 is only a small piece for digital coins if the conventional stock markets are taken into consideration. At the same time, the ICO market is growing at a rapid pace since the blockchain-based startup could easily raise money simply by demonstrating a white paper before investors. These promoters supply tokens instead of shares to investors as they are launched from platforms such as EOS, NEO and Ethereum. The primary gains of using the distributed ledger technology (DLT) platform is the potential of including smart contract to execute terms.

 

Exchange for Products

The ICOs issuing tokens meant that investor will not get any equity or another form of asset. On the other hand, any digital coins or tokens issued would be exchanged for any future products or services from the company. There are some countries that are identified as preferred destinations for launching ICOs due to the favorable atmosphere. They are mostly either dApp or utility tokens only.

Despite significant fundraising exercising from the ICOs in 2018, the overall cryptocurrency market is in doldrums in the absence of clarity on regulations and treatment of it. The weak and continuous drop in sentiments on the virtual assets has only led to massive losses to investors. Significantly, 99 percent of the ICOs witnessed a loss after their highs.

 

STOs Backed By Asset

As investors started realizing the gamble of investing in ICOs, a fresh form of fundraising through STO has emerged for startups. There are some similarities with that of a conventional business launching an initial public offering (ICO). STOs, which is normally approved by the Securities and Exchange Commission (SEC), is backed by assets and legally binding investment contracts. As a result, it offers investors access to the company’s share of voice in the decision-making process.

The primary difference between the ICO and STOs are that while the former has failed to provide any rights to investors, the latter provides enough rights that are much similar to IPOs. In short, the misgivings that exist in ICOs will be removed from the STOs. On top of this, it removes any scam projects since it needed to comply with the regulations. Because of the surveillance, STOs are better served for investors compared to ICOs.

ICO

Pablo Escobar’s Brother: Roberto Escobar launches Escobar Stablecoin ICO

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Roberto Escobar, the brother of the late drug lord Pablo Escobar has launched an initial coin offering for a dollar pegged ESCOBAR stablecoin.

Roberto Escobar, the former operator of the Medellin cartel and the brother of the late drug lord Pablo Escobar has launched an initial coin offering for a dollar pegged stablecoin. Roberto Escobar is directly targeting Donald Trump in his crowdfunding campaign and is targeting a whopping $50 million investment.

 

Escobar ICO:

The crowdfunding is being promoted on the official Impeach Trump Fund website which reads that Roberto Escobar is now accepting donations to impeach President Donald Trump in 2019.  The website has also posted content starting Donald Trump has the worst president that the United States of America has had. The donation can be made by buying the ESCOBAR stablecoin on the website http://escobartrump.org/.  The Escobar ICO also claims that USDT or Tether is not a trustworthy stablecoin and Escobar Stablecoin is planning to compete with USDT. They are also claiming that Donald Trump had ordered GoFundMe to close down their funding after they had received $10 million investment. Olof Gustafsson, the CEO of Escobar Inc, the company running the ICO and the stablecoin told Hard Fork that earlier their aim was to raise $50 million using GoFundMe platform but their funding was shut down b the website. Just within 24 hours of being shut down, they launched the ESCOBAR stablecoin for avoiding anyone to censor them again.

 

ESCOBAR stablecoin whitepaper:

The whitepaper of the ESCOBAR stablecoin reads that 1 billion ESCOBAR tokens (ERC 20) shall be issued on the Ethereum Blockchain. The tokens shall be pegged with US dollar and will be redeemable through an entity registered in Belize.

 

The COO of Escobar Inc, Daniel Reitberg said that they had plans to launch the ESCOBAR stablecoin in 2019 and is they are insisting people to use their stablecoin. He also added that they don’t trust Tether and that Roberto Escobar has had a wonderful career in his lifetime making hundreds of billions of dollars.

 

Roberto Escobar had earlier tried launching Diet Bitcoin: A bitcoin hard fork in March 2018. The Diet Bitcoin website read that bitcoin needed an alternative as CIA was about to destroy bitcoin.

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Cryptocurrency

South Korea Planning ICO and Crypto Taxation

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The government of South Korea is planning the taxation on Cryptocurrencies and Initial Coin Offerings according to a document presented by Hong Nam-ki.

In accordance with a document presented by Hong Nam-ki, the finance minister nominee, the government tax authorities of South Korea are planning the taxation on Cryptocurrencies and Initial Coin Offerings.

 

Document submitted to the National Assembly of South Korea

According to Hong Nam-ki, the document shall be concluded by the creation and advancement of tax infrastructure. The document was submitted to the Korean National Assembly.

A special task force shall be appointed to access the document and examine different cryptocurrency taxation plans to choose the most suitable.

The document mentioned cryptocurrency as an electronic sign of value that is issued by private authorities and not by a government bank or financial institutions. The document also stated about more than 2000 crypto that exists in the cryptocurrency world although only about 160 are being traded currently on the exchanges of South Korea.

Hong Nam-ki also focused on Initial Coin Offerings that are currently banned in South Korea saying that ICO market will be examined and monitored carefully.

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#Ethereum

Beware: Large Ethereum Selloff by ICOs

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The major reason for the downfall of Ethereum is large selling by ICOs which kept bringing the price of ETH down the whole year.

2018 has proved to be the worst year for Ethereum as the coin was trading at a high of $1400 at the start of the year and smashed down around 92% now trading just a few points above $100. The major reason for the downfall of Ethereum is large selling by ICOs which kept bringing the price of ETH down the whole year.

 

November’s ICO selloff

November has been the worst month of the year for the cryptocurrency market bringing down the most prominent cryptocurrency; bitcoin down from around $6500 to around $3500. The price of Ethereum at the start of the month was around $200 which fell to around $104 in November this year. Not only did the price of Ethereum fall but also the market capitalization of Ethereum fell largely turning it to be the 3rd top cryptocurrency by market capitalization after maintaining the 2nd stop for a long period.

According to reports, Around 170,000 ETH have been withdrawn from ICO wallets in the month of November only which amount to almost $20 million dollars worst of Ethereum sellings (According to the current price). ICO selloff has been due to the sudden panic created in the market due to the fear created amongst ICO holders that the price may even fall further below the $100 range.

According to the reports, the most important point to be noted is that only about 20% ICO’s have sold their ETH holdings yet which states that 80% ICO’s still hold Ethereum which is expected to be a part of the next major selloff which may bring the price to double digits.

 

ICOs that raised around $100 million worth ETH in January this year are left with just around $8 million worth of ETH. What’s ahead for ETH? What do you think? Tell us in the comments section below.

 

This article is only the viewpoints of the author and the author is not a financial advise. You should do your own due diligence before taking any position in Bitcoin or any Cryptocurrency market.

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