In the world of cryptocurrencies there are many terms that can get confusing, due to bad translations or bad uses of the words. The so-called tokens or tokens are a very important part of an ICO and you have to be very clear about what they are. Keep reading!
In this article you will find:
What is an ICO?
Since we are clearing up questions about terms, why not start from the beginning? Initial Coin Offerings (ICOs) are a excellent fundraising tool and create a blockchain ecosystem. In Spanish? An investment in cryptocurrencies.
Advertisements
It goes like this: cryptocurrencies and their ecosystem are quite complex and difficult to create. They need a lot of resources to pay staff and other things. But that does not stop those who do not own them: the model of IPOs (Initial Public Offering) was borrowed from any traditional business and adapted to cryptocurrencies.
In IPOs, a share that rises or falls in value is given, in exchange for the investor's money, directly proportional to the value of the company. But, if an ICO is to create an ecosystem of cryptocurrencies and, therefore, these are not ready yet, much less in circulation, what can be offered? This is how the concept of "token" was born.
Advertisements
What is a token?
A token is what you get in exchange for your investment. The truth is that you can do several things with them, but that will depend on the type you have. Each ICO has its own token, and there are several types of these:
- Equity tokens
Surely, one of the best possibilities of smart contracts based on Ethereum is the probability that the projects that are starting will create tokens of shares or shares through ICOs. This will benefit the projects because the entry barrier in financial markets will be much lower than in the past.
Advertisements
It will make trading more accessible to the average investor and allow shareholders to take a more active role in it. corporate governance since voting can be conducted transparently through the blockchain.
Thanks to the current lack of regulatory guidance, a few projects have attempted to drive equity token sales. However, Delaware recently passed an account that allows companies to maintain a list of shareholder names on a blockchain and not in conventional methods. Consequently, it is probably a matter of time before equity tokens take a central role in the cryptocurrency financial industry.
Advertisements
- Utility tokens
Presumably, most of the tokens are securities since most participating ICOs see the crowdsales as opportunities. However, if a token does not meet the three requirements of the Howey test, it may fall under the qualification of a "utility token." These can also be called app coins or app tokens, and they provide users with access to a product or service.
For example, Filecoin plans to provide decentralized cloud storage that will take advantage of unused computer hard drives. ICO contributors received tokens that they were able to use to purchase Filecoin storage space once the service was launched.
Advertisements
Since the entire supplement is fixed, the utility tokens can be appreciated over time if the demand for the product or service increases. However, investors should beware of projects that describe their token as utility or currency. of app but also that they classify it as investment because regulators are likely to consider the action of heritage.
- Securities tokens
A security token is a broad classification that refers to any type of asset that is exchangeable. Through ICOs, investors have access to a wide variety of security tokens, from those backed by precious metals to those backed by a state true.
In the United States, these token sales and investments are subject to SEC security regulations. SEC v. Howey established the guidelines for when a financial arrangement involved an investment contract and was subject to security regulations.
As Marco Santori described it, an arrangement is a security if it involves "an investment of money and a common enterprise, with the hope of profit, primarily thanks to the efforts of others."
Edith Gómez, editor at https://gananci.com/, passionate about digital marketing and specialist in online communication. Refuses to go to bed every night without learning something new. She is disturbed by business ideas and, even more, to bring a creative look to the small world in which we live.
