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The world continues to experience a prior unseen number of emerging start-ups that receive primary funding from ICO. However, as Fintech is penetrating deeper into our everyday lives and improving it with more convenience, regulatory authorities are loosening the strict legal framework in order to account for the newly introduced solutions. The number of investors, who are interested in token economics and digitalization of major industries, continues to increase proportionally.
The choice between security and utility tokens
Utility tokens enable customers to take advantage of special promotions, discounts and access to the future product or service. It functions like a library membership card, which allows you to access books in hard copies and electronic format, yet does not give you the opportunity to purchase them. Security tokens function in a different manner. They provide their holders an investment interest in a company. Moreover, it allows one to benefit from company’s profits or a rise in its value.
ICOs have been strongly advocating the use of security tokens, as they are simpler and more convenient as compared to the utility tokens. At the same time though, the security tokens are subject to more precise legal rules and regulations. This means that people, who possess them must be more attentive in their actions. The legal framework also creates more guidance and motivation for ICOs in relation to crowd sales. Investors are less hesitant to invest in security tokens assuming the presence of a legal framework that minimizes risk through increasing the burden of responsibility.
Taking about gold and real estate
We cannot yet be certain in our predictions concerning the digitalization of the gold and real estate industries, as it is still at its early stages. The speed and success of this process highly depends on the advancements in other Fintech sectors like crypto-to-fiat trading and digital assets exchange. Potentially, the industry might introduce such opportunity as trade of real estate investment trust bonds and enable the reception of dividends on them via a security token approach. There are no current cases of application of such technology, but the rise of crypto-trading efficiency fuels the aspirations for the future. Some have a different vision of the future and are certain in their beliefs that digitalization will be soon introduces to all areas of human life and activity.
The decrease of crowdfunding
Crowdfunding is indeed losing its popularity. This is mainly true because of the wide presence of ICOs, which outnumber the demand for them, leading to the negative experience of many investors with crowdfunding. Investors have learned their lessons and are now much more selective and attentive, while crowd sales are significantly fewer. They examine and rely greatly on the legal framework when participating in crowd sales, and give advantage to security tokens rather than to the utility ones. Currently, it is the credibility of actors and the prospective value of their projects that can attract investors and earn their trust.