06 May 2019 #Ethereum
There is a battle for tokenized funding going on with a number of different methods of raising funds battling for supremacy. Such is the nature of cryptocurrency that none may ever win out completely, and it's also possible that each type of fundraising will find it's own niche.
STOs, IEOs and ICOs are all competing in the same shallow pool of consumer investment but that is changing. Large institutions are climbing into the fray and bring large swathes of money that are quickly changing the entire crypto investment landscape.
Many in the industry hailed STOs as the next big thing to take over from ICOs, but that ha snot turned out the way people wanted it to. Innovation is a fickle game, and the innovation behind tokenized physical assets has been largely from a traditional financial institution's point of view. STOs are quickly becoming an alternative to giving the bank your deed, or ownership of your assets. It is crowdfunding both financing and ownership while retaining control... something that is completely different from an ICO.
The IEO has now become the latest challenger to ICOs and for very good reason. They give everything that an ICO gives but with a few key differences. One of the big draws regarding ICOs, at least from the buyers perspective, is that it was open to anyone and everyone. In the early days of cryptocurrency when traditional financial institutions had no interest in financing cryptocurrencies, this was important to startups.
These days it is not as important since VC money is easier to come by, but no one in the industry wants to see ICOs become a walled garden either and this is a distinct possibility if regulations become too tight. IEOs give the security of regulated securities offerings but make it available to everyone.
Modern-day crypto exchanges are large financial powerhouses in their own right, with departments of economists and lawyers dedicated to keeping their operation going. They have leveraged the knowledge and experience of these in-house experts and use them to vet an ICO properly. They then take the burden of marketing and distributing the token onto themselves.
Customers can be sure that the due diligence done by a large crypto exchange is better than anything (most) retail investors would be able to do on their own. After, no crypto exchange wants to tarnish their reputation by taking on the tokens of a scammer. They do take a fee for marketing, and a portion of the token sales for themselves. It is worth it, as BitTorrent can attest. They launched their ICO through Binance and the two giants together were able to break records.
IEOs don't just benefit exchanges and investors, they benefit the companies as well. Having the marketing power of one of the world's largest exchanges behind you is invaluable. What is overlooked by many though, is that the token or coin that is being offered will automatically be listed on an exchange.
Previously, ICOs were hit and miss because exchanges weren't as open to adding as many coins as possible. So a startup would have to wait and hope that a friendly exchange would pick up their coin or token, but now that is not the case. An IEO will include coin listing as a part of its package. Having much better, much more targeted marketing and an immediate listing means that a big part of the worries of ICOs past is not an issue anymore.
Overall, IEOs are an innovation that benefit exchanges, startups and end users. They bring all the best aspects of an ICO and make it into something that is far greater than before.
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